Annual Report

Transcription

Annual Report

www.askaribank.com.pk
Annual Report for the year ended December 31, 2009
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Contents
At Askari, we believe there is no substitute
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to technology. Technology drives
creativity, innovation, and the future.
With this belief we have embarked upon
a major initiative by introducing stateof-the-art technology solutions for all
key areas of banking i.e., core banking,
client relationship, human resource,
risk management, finance and vendor
management, to make ourselves ready
for the banking of the future, to operate
in a hi-tech era and to enhance our
capabilities to compete in the local and
global marketplace. It isn’t just about a
year or two, we are set to turn intersecting
ideas and our fledgling technologies into
a bank that can continue to innovate in
Financial Highlights
Pakistan’s Economic Profile
18 Years of banking
What we stand for
Vision & Mission
Corporate Information
Directors’ Profile
Notice of 18th Annual General Meeting
Management
Organogram
Risk Management Framework
Entity Ratings
Corporate Social Responsibility
President’s Message
Technology Initiative
Value Added Statement
Askari Bank’s Presence
Business and Operations Review
Financial Review
Financial Calendar
Share & Debt Information Horizontal & Vertical Analysis
Decade’s Performance Summary
Directors’ Report
times to come.
Financial Statements of
Askari Bank Limited
We are excited about entering into a new
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era of technological advancements and
that is the expression on this year’s cover.
Statement of Compliance
Review Report to the Members
Auditors’ Report to the Members
Statement of Financial Position
Profit and Loss Account
Statement of Changes in Equity
Cash Flow Statement
Notes to the Financial Statements
Consolidated Financial Statements of
Askari Bank Limited and its Subsidiaries
Designed & Printed by
www.vantagepakistan.com
CMYK • Special Yellow • Askari Cover Front • Askari Bank Annual Report 2009 • 5 Colors • March 01, 2010
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Consolidated Statement of Financial Position
Consolidated Profit and Loss Account
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Consolidated Financial Statements
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Pattern of Shareholding
Correspondent Network
Branch Network
Statement of Financial Position in US dollars
Profit and Loss Account in US dollars
Glossary of Financial & Banking Terms
Form of Proxy
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Contents
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18 Years of banking
What we stand for
Vision & Mission
Management
Organogram
Entity Ratings
Financial Review
Financial Calendar
Directors’ Report
times to come.
Askari Bank Limited
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Cash Flow Statement
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Branch Network
Form of Proxy
All our efforts are
driven by the will to
be instrumental in
your success
CMYK • Special Yellow • Askari Cover • Askari Bank Annual Report 2009 • 5 Colors • March 01, 2010
Annual Report | 2009
Financial Highlights 2009
After Tax up by
Profit
187%
Before Tax up by
Rs.1.108 billion (2008:Rs.386 million)
Deposit
Increased by
Rs.1.642 billion (2008:Rs. 461 million)
Advances
23%
Increased by
Equity
Total Assets
23%
Increased by
Rs.254 billion (2008:Rs.206 billion)
EPS
Increased by
15%
Rs.14.95 billion (2008:Rs.12.97 billion)
Market Value
187%
of shares
increased by
Stock Dividend:
(2008: 25%)
20%
87%
Rs.27.30 (2008:Rs.14.57)
Rs.2.18 (2008:Re.0.76)
Payout
6%
Increased by
256%
Network
Increased to
226
from 200 of last year
page | 1
Askari Bank Limited | The Country
Country statistics
796,100
166
1.80
206
64
56
Land area (sq. km)
Population (million)
Population growth (%)
Population density (people/sq. km.)
Life expectancy (years)
Literacy (%)
At fiscal year end
2003-04
2004–05
2005–06
2006–07
6.4
8.4
6.6
7.02
GDP at current factor cost (Pak Rs. billion)
5,251 6,123 7,159 GDP -at market prices (Pak Rs. billion)
5,640 6,500 7,623 2007–08
2008-09
Economic indicators GDP Growth (%)
Inflation (%)
Trade balance (USD million)
5.8 2.0
8,235 9,962 12,460
8,673 10,284 13,095
4.6
9.3
7.9
7.8
12.00 21.00
(3,279)
(6,207)
(12,130)
(13,564)
(20,914)
(14,160)
1,811 (1,534)
(4,999)
(7,403)
(13,874)
(9,424)
12,425
Current account balance ex. Official transfers (USD million)
Foreign currency reserves -year end (USD million)
12,389 12,598 13,122 15,647 11,369 Exchange rate (USD)
58.15
59.67
60.18
60.37
68.40 81.46
Exchange rate (Euro)
70.90
72.14
76.47
81.70
108.20 114.80
131 191 315 484
548 638
Total assets of the banking system (Pak Rs. billion) 3,003 3,624 3,884 4,785 5,074 5,595
KSE 100 index points
5,279 7,450 9,989 13,772 12,289 7,162
Stock market capitalization (Pak Rs. billion)
1,403 2,037 2,766 3,981 3,778 2,155
2004
2005
2006
2007
2008
2009
Capital adequacy ratio - %
10.5
11.3
12.7
13.2
12.1
13.5
Advances/Deposits ratio -%
65.8
70.2
74.6
69.8
69.8
69.6
1.2
1.9
2.1
1.5
1.7
1.0
Networth of the banking system (Pak Rs. billion)
At calendar year end
Banking system
Return on Assets (after tax) -%
* Pakistan’s fiscal year starts on July 1 and ends on June 30.
page | 2
GDP - Growth
7.0
2.0
5.8
6.4
6.6
8.4
(Percent)
2004
2005
2006
2007
2008
2009
Foreign Exchange Reserves
2006
2007
2008
12.4
13.1
2005
11.4
12.6
2004
15.6
12.4
(US$ in billion)
2009
Foreign Trade
2007
2008
17.8
17.0
12.3
2005
2004
Imports
19.1
16.5
2006
14.4
15.6
20.6
28.6
30.5
34.8
40.0
(US$ in billion)
2009
Exports
Sectoral Contribution GDP
4.7
3.6
1.1
4.8
6.6
8.3
7.0
4.1
6.5
6.3
8.7
15.5
6.5
2.4
5.8
8.5
14.0
(Percent)
2005
2006
2007
2008
2009
–3.3
2004
Agriculture
Manufacturing
Services
page | 3
Askari Bank Limited | History
18 Years of banking
Askari Bank was incorporated
in Pakistan on October 9, 1991,
as a public limited company. It
commenced operations on April 1,
1992, and is principally engaged in the
business of banking, as defined in the
Banking Companies Ordinance, 1962.
The Bank is listed on Karachi, Lahore
and Islamabad Stock Exchanges.
Askari Bank has expanded into a
network of 226 branches / subbranches, including 31 dedicated
Islamic banking branches, and a
wholesale bank branch in Bahrain.
A shared network of 4,173 online
ATMs covering all major cities in
page | 4
Pakistan supports the delivery
channels for customer service. As
at December 31, 2009, the Bank had
equity of Rs. 14.95 billion and total
assets of Rs. 254.33 billion, with
984,485 banking customers, serviced
by our 6,159 employees.
Askari Investment Management
Limited and Askari Securities Limited
are subsidiaries of Askari Bank
engaged in managing mutual funds
and shares brokerage, respectively.
page | 5
Askari Bank Limited | Corporate
What we stand for
Our
vision
To be the bank of first choice in the region
Our thinking
Creating opportunities with innovation
and technology
Integrity
Fairness
Commitment
Investors
A distinctive
investment, delivering
outstanding
performance, return
and value
Regulators
Our
Customers
Passionate about our customers’
success, delighting them with the
Exemplary compliance,
governance and
Values
quality of our service
Teamwork
business ethics
Service
Employees
Caring for our people and
helping them to grow
Communities
Dedication towards social
development and improvement in
quality of life
page | 6
Our vision to be the bank of first
the existing technology with a
reliable information on our activities,
choice in the region demands
comprehensive state-of-the-art
structure, financial situation, and
continuous strive for creation
solutions. This initiative will greatly
performance.
of business opportunities with
improve our product delivery and
innovation while maintaining
service abilities.
our core values to meet our
commitment to all our stakeholders.
The range of our products aims to
serve our diverse customer base
that comprises of corporates, SMEs,
individual savers, households and,
farmers. At the same time, our
people are constantly engaged in
assessing customer needs and
market dynamics to realign our
products and our priorities to attain
brand recognition and competitive
edge. We are reshaping our portfolio
of businesses by investing in
higher growth areas, extending and
developing our core competencies
and moving out of weak and non–
core segments.
Technology has played a pivotal role
in meeting customer expectations,
particularly with respect to speed
and quality of service. We have
fully automated transaction–
processing systems for back–office
support. Our branch network is
connected on–line real–time and
our customers have access to
off–site as well as on–site ATMs, all
over Pakistan. Our phone banking
service, Askari TeleCare, and internet
banking facility allows customers to
enjoy routine banking service from
anywhere, anytime in the world.
We also pioneered an e–commerce
venture in Pakistan. Our mobile
Our values
discipline and harmony of
our corporate objectives with
standard in whatever we do. We
regulatory framework. Our business
understand that our commitment
methodologies are designed
to satisfy customers’ needs must
to ensure compliance with the
be fulfilled within a professional and
directives of all our regulators.
ethical framework. We subscribe to
a culture of high ethical standards,
Our employees
based on the development of right
We strongly believe that the
attitudes. The intrinsic values,
which are the corner stones of our
corporate behavior, are:
•
Commitment
•
Integrity
•
Fairness
•
Teamwork
•
Service
Our customers
interests of the Bank and the
employees are inseparable. At
Askari we try to create a ‘we’
culture where there is mutual trust
and respect for each other. We
encourage ownership behavior so
that everyone feels responsible for
the performance and reputation
of the Bank. We are committed
to develop and enhance each
employee’s skills and capabilities
Knowing our customers and their
through extensive in–house and
needs is the key to our business
external training programs and
success. Our products and services
job rotations. In order to ensure
are as diverse as our market
meritocracy, our appraisal system is
segments. Our client relationship
purely performance based.
managers are well equipped and
well trained to provide the most
Our communities
efficient and personalized service to
We fully recognize our corporate
the customers. Askari Bank is proud
of its pioneering role in providing the
most modern and technologically
advanced services to its 984,485
relationships.
social responsibility and our
contributions to different areas of
the social sector are aimed to help
improve the quality of life in our
Country.
Our investors
We believe that the bottom line of
To further strengthen and enhance
value. To gain their trust and
is in the process of replacing
We firmly believe in regulatory
Integrity is the most valued
ATMs are the first in Pakistan.
our technology platform, the Bank
Our regulators
any business is creating shareholder
confidence, we believe in providing
our investors timely, regular and
page | 7
Vision &
Mission
Vision
Corporate Objectives
To be the bank of first choice in the
region
•
To achieve sustained growth
and profitability in all areas of
business.
•
•
Mission
To be the leading private sector bank
in Pakistan with an international
presence, delivering quality service
through innovative technology
and effective human resource
management in a modern and
progressive organizational culture of
meritocracy, maintaining high ethical
and professional standards, while
providing enhanced value to all our
stakeholders, and contributing to
society.
page | 8
•
To manage the Bank’s portfolio
of businesses to achieve strong
and sustainable shareholder
returns and to continuously build
shareholder value.
To build and sustain a high
performance culture, with a
continuous improvement focus.
•
To deliver timely solutions
that best meet the customers’
financial needs.
To develop a customer–service
oriented culture with special
emphasis on customer care and
convenience.
•
To explore new avenues for
growth and profitability.
•
To build an enabling
environment, where employees
are motivated to contribute to
their full potential.
•
To effectively manage and
mitigate all kinds of risks
inherent in the banking business.
•
To optimize use of technology
to ensure cost–effective
operations, strengthening of
controls, efficient management
information system, enhanced
delivery capability, and high
service standards.
Strategic Planning
•
To comprehensively plan for
the future to ensure sustained
growth and profitability.
•
To facilitate alignment of the
Vision, Mission, Corporate
Objectives with the business
goals and objectives.
•
To provide strategic initiatives
and solutions for projects,
products, policies and
procedures.
•
To provide strategic solutions to
strengthen weak areas and to
counter threats to profits.
•
To identify strategic initiatives
and opportunities for profit.
•
To create and leverage strategic
assets and capabilities for
competitive advantage.
•
Code of Ethics and Conduct
Askari Bank seeks to maintain high
standards of service and ethics
enabling it to be perceived as
impartial, ethical and independent. In
addition to the general guidelines, the
following are the salient features of
the Bank’s code of ethics and conduct.
•
•
•
Presence of a corporate
culture that seeks to create
an environment where all
employees are treated equitably
and with respect.
Employees must carry out their
responsibilities in a professional
manner at all times. They must
act in a prudent manner and
must avoid situations that
could reflect unfavorably on
themselves, the Bank or its
customers.
•
Employees must commit to
the continued development
of the service culture in which
the Bank consistently seeks to
exceed customers’ expectations.
Fairness, Truthfulness and
Transparency govern our
customer relationships in
determining the transactional
terms, conditions, rights and
obligations.
Employees must safeguard
confidential information which
may come to their possession
during the discharge of their
responsibilities. Respect for
customers’ confidential matters,
merits the same care as does
the protection of the Bank’s own
affairs or other interests.
Employees must ensure that
‘know your customer’ principles
are adhered to by obtaining
sufficient information about the
customers to reasonably satisfy
ourselves as to their reputation,
standing and the nature of their
business activities.
•
Employees must avoid
circumstances in which their
personal interest conflicts, or
may appear to conflict, with
the interest of the Bank or its
customers. Employees must
never use their position in
the Bank to obtain personal
advantage or gain.
•
Employees must not enter into
an agreement, understanding
or arrangement with any
competitor with respect to
pricing of services, profit rates
and / or marketing policies,
which may adversely affect the
Bank’s business.
•
Employees must not accept gifts,
business entertainment or other
benefits from a customer or a
supplier / vendor, which appear
or may appear to compromise
commercial or business
relationship.
•
Employees must remain alert
and vigilant with respect to
frauds, thefts or illegal activities
committed within the Bank
premises.
page | 9
Board of Directors
Registered / Head Office
Lt. Gen. Javed Zia
AWT Plaza, The Mall,
Chairman
P.O. Box No. 1084
Lt. Gen. (R) Imtiaz Hussain
Maj. Gen. (R) Saeed Ahmed Khan
Mr. Zafar Alam Khan Sumbal
Mr. Muhammad Riyazul Haque
Mr. Shahid Mahmud
Rawalpindi- 46000,
Pakistan.
Tel: (92 51) 9063000
Fax: (92 51) 9272455
E-mail: [email protected]
Website: www.askaribank.com.pk
Mr. Ali Noormahomed Rattansey, FCA
Registrar and
Share Transfer Office
Dr. Bashir Ahmad Khan
THK Associates (Pvt) Limited
Mr. Tariq Iqbal Khan, FCA
Dr. Ziauddin Ahmad Road, Karachi -75530
Mr. M. R. Mehkari
President & Chief Executive
Ground Floor, State Life Building No. 3,
P.O. Box: 8533, Karachi.
Tel: (92 21) 5689021, 5686658, 5685681
Fax: (92 21) 111 000 322
Audit Committee
Chairman
Mr. Ali Noormahomed Rattansey, FCA
Mr. Tariq Iqbal Khan, FCA
Company Secretary
Mr. M. A. Ghazali Marghoob, FCA
Chief Financial Officer
Mr. Saleem Anwar, FCA
Auditors
A. F. Ferguson & Co
Chartered Accountants
Legal Advisors
Rizvi, Isa, Afridi & Angell
Shariah Advisor
Dr. Muhammad Tahir Mansoori
page | 10
Entity Ratings
Long Term: AA
Short Term: A1 +
by PACRA
page | 11
Lt. Gen. Javed Zia HI (M)
Lt. Gen. (R) Imtiaz Hussain HI (M)
Maj. Gen. (R) Saeed Ahmed Khan
Chairman
Director
Director
Lt. Gen. Javed Zia joined the Board of
Directors on October 22, 2008.
Lt. Gen. (R) Imtiaz Hussain joined the
Board of Directors on January 1, 2009.
Maj. Gen. (R) Saeed Ahmed Khan joined
the Board of Directors on June 12, 2009.
He is currently serving as Adjutant
General (AG) of the Pakistan Army. He is
a graduate of Command & Staff College
Quetta and National Defense University,
Islamabad. Also, he qualified as MSc (War
Studies) from Quaid-e-Azam University,
Islamabad and M.A. Political Science from
the University of Balochistan.
He is currently Managing Director of
Army Welfare Trust. He is a graduate of
Command & Staff College Quetta and
National Defense University, Islamabad.
Also, he qualified as MSc (War Studies)
from Quaid-e-Azam University, Islamabad.
He is Executive Director Finance of
Army Welfare Trust. He is a graduate
from Punjab University & University
of Balochistan. Also, he possesses a
qualification of MSc (War Studies) from
Quaid-e-Azam University, Islamabad.
He was commissioned in the Pakistan
Army in 1971 and had a distinguished
career spanning over a period of more
than 37 years. He has worked on
various command, staff & instructional
assignments in his illustrious career
including Command of an Infantry Division
and Corps. He has also served as Director
General Doctrine and Evolution, Director
General Weapons and Equipment, and
Adjutant General of Pakistan Army before
retiring in October 2008.
He was commissioned in the Pakistan
Army in December, 1971 and had a
distinguished career spanning over a
period of more than 35 years. He has
worked on various command and staff
assignments in his illustrious career in the
Pakistan Army.
He was commissioned in Pakistan Army
in April 1972 and had a distinguished
career spanning over a period of more
than 35 years. He has worked on various
command, staff and instructional
assignments in his illustrious career in the
Pakistan Army. He has commanded an
Infantry Division besides being the Director
General Pakistan Rangers (Sindh). He has
also served as the Deputy Chief of the
General Staff.
page | 12
Mr. Shahid Mahmud
Director
Director
Director
Mr. Zafar Alam Khan Sumbal is one of the
founder directors of the Bank.
Mr. Muhammad Riyazul Haque joined
the Board of Directors of the Bank on
September 1, 2008.
Mr. Shahid Mahmud joined the Board of
Directors of the Bank on September 1,
2008.
He holds master’s degrees in Development
Economics [Williams College, USA];
Economic and Social Sciences [University
of Manchester]; and English [GCU, Lahore].
He joined the Government of Pakistan in
1966. He has worked in all the provinces
of Pakistan, and in districts, as Secretary
to the Government of Baluchistan, as Joint
Secretary in the President and the PM
secretariat and in EAD, and as Additional
Secretary [Banking and Foreign Exchange].
He has been a director on the boards of
HBL, and of Pak-Kuwait and Saudi -Pak
Investment companies.
He holds a Master Degree in Defense &
Strategic Studies from National Defense
University along with more than 25 years
of professional experience in the field
of IT & communications. He is presently
working as Chairman & Chief Executive
Officer of Interactive Communication (Pvt)
Limited and Interactive Convergence (Pvt)
Limited. He has been the founder director
and shareholder of Paktel, Indus Vision,
Pak Globalstar (Pvt) Limited, SHOA (Pvt)
Limited, and Shaheen Pay TV (Pvt) Limited.
Mr. Shahid is an Eisenhower fellow and
its honorary life member. He is also a
member & founder member of various
organizations.
He is a post graduate in Economics and
holds a vast experience in banking and
finance spanning over 37 years both in
Pakistan and abroad.
He has also worked as Company Secretary
of the Bank till April 2005 before elevated
to his current position of Director
Corporate by the Board of Directors of the
Bank. He also holds a position of Chief
Executive Officer of one of the projects of
Army Welfare Trust. He is on the Board of
Directors of Askari Leasing Limited as
well.
Mr. Haque worked as international
professional staff for the Asian
Development Bank in several countries. He
was Team Leader for project development,
processing, implementation, and
monitoring and evaluation, of development
projects, and of institutions including
banks. He led the production of policy
documents and instruction manuals.
He has led delegations of GOP with
international financial institutions, and
of the ADB with other countries. He has
worked as a consultant with UNDP.
He has attended numerous training
sessions and seminars for strategic
management, marketing, market research
and analysis, distribution and supply chain
management, material management,
change acceleration process, electric
commerce, information technology,
telecommunications, media and various
other product systems in various countries
including USA, UK, Hong Kong, Singapore,
Canada & Pakistan.
Mr. Haque has attended a large number of
conferences and other moots in Pakistan
and abroad, has been a member of
professional societies, actively associated
with think tanks and social groups and has
travelled abroad extensively.
page | 13
Mr. Ali Noormahomed Rattansey
Mr. Tariq Iqbal Khan
Director
Director
Director
Mr. Ali Noormahomed Rattansey joined
the Board of Directors on September 1,
2008.
Dr. Bashir Ahmad Khan joined the Board of
Directors on March 28, 2008.
Mr. Tariq Iqbal Khan is on the Board of the
Bank since October 2001.
He has more than 20 years of academic
and professional experience and is
presently working as professor of finance
and head of department of business
studies at Forman Christian (FC) College.
He taught at the Suleman Dawood
School of Business at Lahore University
of Management Sciences (LUMS) for
18 years, where he was also associate
dean of executive education. He has
played a key role in the launch of both
customer-specific and open enrolment
executive education programs for various
institutions & companies. His current
responsibilities include strategic and
financial planning, budgeting, human
resource management, and business
development. He has been a financial
and management consultant for various
commercial and non-commercial
organizations. He has also been on the
Policy Board of the Securities & Exchange
Commission of Pakistan and a member
of the board of Askari Investment
Management Limited, a subsidiary of
Askari Bank.
He is Chairman/Managing Director of
National Investment Trust (NIT).
He has 38 years of working experience.
He is a fellow member of the Institute
of Chartered Accountants in England &
Wales and has been associated with A. F.
Ferguson & Co. Chartered Accountants,
Pakistan for 31 years (including 23 years
as a partner). He has extensive experience
in audit, accounting, tax and financial and
corporate consultancy, with significant
exposure to Pakistan corporate sector
including subsidiaries of multinational
companies operating in Pakistan. He is
also a director of New Jubilee Insurance
Company Limited and New Jubilee Life
Insurance Company Limited, and chairman
of Aga Khan Rural Support Programme.
He has participated in numerous trainings,
workshops & seminars related to Audit,
Finance & Management.
page | 14
He is a fellow member of the Institute
of Chartered Accountants of Pakistan
with over 40 years of experience in the
corporate sector in the areas of finance &
accounts, capital markets, company law,
taxation etc. He is a founder director of
Islamabad Stock Exchange and has also
been its president during 1995-1998. He
has also served as member Tax Policy
and Co-ordination in Federal Board of
Revenue before joining the Securities &
Exchange Commission of Pakistan as a
commissioner and officiated as acting
chairman in 2000. He is also working
as member on the board of directors of
various companies in Pakistan.
He has also attended large number of
conferences, seminars, and workshops in
Mr. Muhammad Rafiquddin Mehkari
Mr. M. A. Ghazali Marghoob
Mr. Saleem Anwar
Company Secretary
Mr. M. R. Mehkari with 39 years of
international and domestic banking
experience and currently serving Askari
Bank in the position of the President and
Chief Executive. He is one of the pioneer
members of Askari Bank.
Mr. M. A. Ghazali Marghoob, Company
Secretary of Askari Bank is a chartered
accountant and holds membership of
the Institute of Chartered Accountants of
Pakistan, Institute of Corporate Secretaries
of Pakistan, Institute of Public Finance
Accountants and a diploma holder from
the Institute of Bankers of Pakistan.
Mr. Anwar joined the Bank in June 2008
and is working as Chief Financial Officer.
In 1971, he started his career with UBL and
in December 1974, joined the erstwhile
BCCI and served at National Bank of
Oman, a subsidiary of BCCI, till 1992. He
carries extensive experience in all banking
dimensions including operations, treasury,
fund management and investment
banking, in international and domestic
banks.
He joined State Bank of Pakistan on
secondment and performed as Director,
Exchange Policy Department from April
2000 to April 2004, where he took several
major initiatives like liberalizing Foreign
Exchange Regime etc. He was also a
member of Corporate Management Team
and Monetary & Exchange Rate Policy
Committee at State Bank of Pakistan.
Mr. Mehkari is also a member on the board
of Khushali Bank and Askari Investment
Management Limited, a subsidiary of
Askari Bank.
He holds diversified experience spanning
over 25 years in the field of finance &
corporate affairs in banking and service
industry.
He started his professional career with
Marriot Hotel and later on worked in Saudi
Pak Industrial & Agricultural Investment
Company and SME Bank as chief financial
officer and company secretary for over 16
years.
He has attended various courses and
seminars in Pakistan and abroad.
He is a Fellow member of the Institute
of Chartered Accountants of Pakistan
and brings with him diversified work
experience spanning over 24 years in the
field of accounting, finance, planning, tax
and corporate affairs, both in Pakistan
and abroad. He started his professional
career with A. F. Ferguson & Co. Chartered
Accountants (affiliates of PriceWaterHouse
Coopers International) and later on, joined
the erstwhile Al Faysal Investment Bank,
the largest investment bank in Pakistan.
He moved to commercial banking in 2002
and worked in various capacities with
banks in Pakistan and abroad. His last
major assignment was with Mashreq Bank
(Badr Al Islami), Dubai, UAE, as head of
special projects.
Mr. Anwar also represents the interest
of the Bank as a director on the board of
Bank’s majority owned subsidiary, Askari
Securities Limited.
He has participated in various training
workshops, seminars and courses on
banking, accounting and finance and
management.
He participated in various courses and
seminars on foreign exchange exposure
& treasury management, money market
and other banking areas of operations in
page | 15
Notice is hereby given that the 18th Annual General Meeting
of the shareholders of Askari Bank Limited [the Bank] will be
held on Tuesday, March 30, 2010 at 10:00 am at Blue Lagoon
Complex Opposite outward gate of Pearl Continental Hotel,
Rawalpindi to transact the following business:
Ordinary Business:
1.
To confirm the minutes of the 5th Extra-Ordinary
Annual General Meeting held on December 21, 2009.
2.
To receive, consider and adopt the financial statements
for the year ended December 31, 2009 together with the
Directors’ and Auditors’ Reports thereon.
3.
To appoint the auditors of the Bank for the year ending
December 31, 2010 and to fix their remuneration.
Statement Under Section 160(1) (b) of the Companies
Ordinance, 1984
This statement sets out the material facts pertaining to the
special business to be transacted at the 18th Annual General
Meeting of the Bank scheduled for March 30, 2010.
Item No. 4 of the notice – Issue of bonus shares
The Directors are of the view that the reserves / profits are
adequate for the capitalization of a sum of Rs. 1,071,240
thousand for issue of the proposed 20% bonus shares and
in this regard compliance has been made under Rule 6 of
Companies (Issue of Capital) Rules, 1996. Auditors’ certificate
in respect of adequacy of reserves has also been obtained.
Notes
Special Business:
A. General
4.
1
The Share Transfer books of the Bank will remain closed
from March 24 to March 30, 2010 (both days inclusive).
Transfers received at M/s THK Associates (Pvt) Ltd.
Ground Floor, State Life Building # 3, Dr. Ziauddin Ahmad
Road, Karachi-75530, the Registrar and Share Transfer
Office of the Bank at the close of the business on March
23, 2010 will be treated in time for purpose of the
entitlement of bonus shares (B-14) to the transferees.
2
A member entitled to attend and vote at the meeting is
entitled to appoint a proxy to attend and vote for him/
her. No person shall act as a proxy, who is not a member
of the Bank except that Government of Pakistan / State
Bank of Pakistan / corporate entity may appoint a
person who is not a member.
3
The instrument appointing a proxy should be signed
by the member or his / her attorney duly authorized in
writing. If the member is a corporate entity (other than
Government of Pakistan and State Bank of Pakistan), its
common seal should be affixed on the instrument.
4
The instrument appointing a proxy, together with power
of attorney, if any, under which it is signed or a notarially
certified copy thereof, should be deposited, with the
Company Secretary, Askari Bank Limited, 1st Floor, AWT
Plaza, The Mall, P.O.Box No. 1084, Rawalpindi, not less
than 48 hours before the time of holding the meeting.
5
If a member appoints more than one proxy, and more
than one instrument of proxy are deposited by a
member, all such instruments of proxy shall be rendered
invalid.
To consider and if deemed fit, pass the following
Resolutions with or without modification(s):
Resolved that
i.
ii.
a sum of Rs. 1,071,240 thousand out of the general
reserve as at December 31, 2009 (including reserves
subsequent to the merger of Askari Leasing
Limited) be capitalized and be applied to the issue
of 107,123,990 ordinary shares of Rs. 10 each
allotted as fully paid bonus shares to the members
whose names appear in the register of members as
at the close of business on March 23, 2010 in the
proportion of 20 shares for every hundred shares
held that is 20%.
The shareholders of Askari Leasing Limited who will
become the shareholders of Askari Bank Limited
after merging of Askari Leasing Limited with and
into Askari Bank Limited in terms of Scheme of
Amalgamation already approved by State bank of
Pakistan would also be entitled for bonus shares
mentioned at (i) above.
iii. The bonus shares shall rank pari passu in all
respects with the existing shares.
iv. The sale proceeds of fraction share entitled to
members shall be donated to any recognized
charitable institution, for which purpose the
fractions shall be consolidated into whole shares
and sold through stock market.
5.
v.
Directors be and are hereby authorized and
empowered to give effect to this resolution and to
do or cause to be done all acts, deeds and things
that may be necessary or required for the issue,
allotment and distribution of Bonus Shares.
To consider any other business as may be placed before
the meeting with the permission of the Chair.
B. For CDC Account Holders
1.
The proxy form shall be witnessed by two persons
whose names, addresses and CNIC numbers shall be
mentioned on the form.
2.
Attested copies of the CNIC or passport of the beneficial
owners and the proxy shall be furnished with the proxy
form.
3.
The proxy shall produce his / her original CNIC or original
passport at the time of meeting.
4.
In case of Government of Pakistan / State Bank of
Pakistan / corporate entity, the board of directors’
resolution / power of attorney with specimen signature
shall be submitted along with proxy form to the Bank.
By order of the Board
Rawalpindi
March 8, 2010
page | 16
M. A. Ghazali Marghoob
Company Secretary
page | 17
Management
Head Office
Central Region
M. R. Mehkari
Adil Zaidi
Tahir Yaqoob Bhatti
Agha Ali Imam
Zehra Khalikdina
Sajjad Ali Sheikh
Ejaz Ahmed Khan
Masood Qadir
Saulat Hameed
Tahir Aziz
Brig. (R) Muhammad Ifzal
Ejaz Musarrat Siddiqui
S. Suhail Rizvi
Hassan Aziz Rana
Mushtaq Ahmed
Javed Iqbal
M. Ahmed Ghazali Marghoob
Tariq Waheed
Rehan Mir
Iftikhar Baloch
Adnan Asghar
Khawaja Shaukat Iqbal
South Region
Country Head, Special Asset Management
Regions/Areas/
W.B. Branch
Hashim Khan Hoti
North Region
Saif-ur-Rehman Khan
Group Head, Marketing & Strategic Planning
Group Head, Commercial Banking
Group Head, Corporate & Investment Banking
Group Head, Operations
Chief Information Officer
Global Treasurer
Country Head, International Banking
Acting Country Head, Risk Management
Country Head, Credit Administration
Country Head, Establishment
Head Legal Affairs
Company Secretary
Chief Information Security Officer
Regional General Manager
Area Manager, Multan
Area Manager, Lahore – II
Area Manager, Lahore – I
Area Manager, Gujranwala
Area Manager, Faisalabad
Area Manager, Sahiwal
Khalid Mohammad Khan
Country Head, Compliance & Data
Country Head, Islamic Banking Services
M. Farooq Abid Tung
Country Head, Agriculture & Rural Business
Saleem Anwar
Mohammad Munir Ahmed
Country Head, Electronic Technology
Lubna Azam
Chief Credit Officer
Mian Shaukat Ali Arif Sirhindi
Country Head, Consumer Banking Services
Zahid Mahmood Chaudhry
Country Head, Human Resource
Haseeb Saulat
Tariq Mahmud Khan
Area Manager, Rawalpindi – I
Inamullah Khan Niazi
Area Manager, Azad Kashmir
Mohammad Tayyab Khan
Area Manager, Islamabad
Tanveer Afzal Khan
Area Manager, Peshawar
Syed Tauqir Haider Rizvi
Muhammad Jaffer Khanani
Area Manager, Karachi – III
Niaz Mohammad
Area Manager, Hyderabad
Qazi A.M. Khalid
Area Manager, Karachi - I
Farrukh Bari
Area Manager, Karachi – IV
Mirajuddin Aziz
Area Manager, Karachi – II
Hafeez Ur Rahman Quraishy
Area Manager, Quetta
Area Manager, Rawalpindi – II
Israr Ahmed
Wholesale Bank Branch,
Bahrain
Farrukh Iqbal Khan
Khurram Dar
Executive Incharge, President Support Office
Country Head, Audit & Inspection
page | 18
Wholesale Bank Branch, Bahrain
Organogram
Board of Directors
Audit
Audit
Committee
Committee
Executive
Committee
President
Audit &
Committee
Chief
Executive
Company
Secretary
Chief Credit
Officer
Group Head
Marketing &
Strategic Planning
Chief Financial
Officer
Country Head
Human Resource
Chief Information
Officer
Group Head
Operations
Global Treasurer
Country Head
Islamic Banking
Services
Country Head
Consumer Banking
Services
Group Head
Commercial
Banking
Group Head
Corporate &
Investment
Banking
Country Head
Risk Management
Strategic Planning
& Economic
Research
Country Head
International
Banking
Training &
Development
Country Head
Electronic
Technology
Country Head
Credit
Administration
Wholesale
Bank Branch
– Bahrain
Islamic Banking
Branches
(31 branches)
Secured Assets
Products
Regional General
Manager
North
(63 branches)
Corporate Head
North
(1 branch)
Country Head
Special Asset
Management
Marketing &
Media
3 Regional
Foreign Trade
Units
Unsecured
Assets
Products
Regional General
Manager
Central
(63 branches)
Corporate Head
Central
(1 branch)
Executive
Incharge
President Support
Office
Service Quality
Head
Legal Affairs
Regional General
Manager
South
(65 branches)
Corporate Head
South
(1 branch)
Country Head
Compliance &
Data
Complaint
Management
Chief Information
Security Officer
Country Head
Agri. & Rural
Business
Investment
Banking
Country Head
Audit & Inspection
3 Regional
Operations
Units
Country Head
Establishment
Capital Market
Operations
Board Members
Direct Reports to the President
Business Functions
Support Functions
page | 19
Strategy, Oversight and
Business Management
Business Support,
Monitoring and Compliance
Independent
Assurance
Board
Credit Approval Process
Internal Audit
Board Committees
Credit Risk Review & Monitoring
External Audit / Inspection
Operational / Market Risk Review
& Monitoring
Management Committees
Credit Admin and Credit MIS
Man
Com
page | 20
Risk
Mgmt
ALCO
Credit
New Product Reviews
Entity Ratings
Long term AA
Short term A1+
Definitions by Pakistan Credit Rating Agency Limited (PACRA) :
AA
Very high credit quality. ‘AA’ ratings denote a very low expectation
of credit risk. They indicate very strong capacity for timely payment
of financial commitments. This capacity is not significantly
vulnerable to foreseeable events.
A1+
Obligations supported by the highest capacity for timely
repayment.
page | 21
Mr. M. R. Mehkari, President Askari Bank speakes
to media at the occasion of CILT Pakistan’s
International Seminar
Askari Bank sponsored ASF Annual Exhibition /
Meena Bazar
Corporate
Social Responsibility
“The only way to
responsible corporate citizen we believe
achieve true success
initiatives with the intent to positively
is to express yourself
completely in service to
society”
in giving back to the society by taking
affect our stake holders, which include our
customers, sponsors, partners, employees,
Responsibility is an integral part of the
way we do business, and is a vital element
of our strategy. We believe that we make
our greatest contribution to the society by
being good at what we do, and doing it in
an inspiring way – providing products and
services that help customers meet their
financial goals.
As a socially conscious organization, Askari
Bank always endeavors to contribute
to the society in which it operates. As a
supported by media campaign to raise
public awareness on this issue.
Askari Bank believes in the cause of
a better environment and continually
sponsors tree plantations, flower festivals,
spring galas as well as other beautification
projects for a greener and cleaner
In order to fulfill our CSR objectives, we
In order to enrich the lives of the public
encouraging community growth and
development through sponsoring social
sports, environment and also contribute in
Askari Bank attempts to add a bit of color
by sponsoring musical events, lifestyle
exhibitions, film and art festivals as well
as trade & industrial expos. We also
regularly contribute to non-government
socio-cultural activities.
organizations which work on social
During the year, Askari Bank has
public.
contributed to various CSR initiatives
development and well being of the general
which include educational, conferences/
Sponsorships
conventions, sporting events like golf and
Askari Bank has sponsored various events
squash as well as sponsoring international
and activities during 2009. Some of the key
sports events like the Fina World
events were:
Swimming Championship.
We have always tried to lend a helping
hand to those who are less fortunate and
in need of assistance. Askari Bank actively
makes donations to various charities that
work for the welfare of the society. In
page | 22
of Askari Bank donated one day’s salary
Pakistan.
service events, supporting education,
At Askari Bank, Corporate Social
Displaced Persons (IDPs) each employee
as well as our communities.
attempt to promote public interest by
(Aristotle)
order to ease the plight of the Internally
Askari Bank’s stall at the Dawn Life Style Exhibition 2009
A group photo of participants of the 13th Fina Swimming Championship sponsored by Askari Bank
Executives of Askari Bank laying a floral wreath as
tribute to the Martyrs of Pakistan Army
Mr. Agha Ali Imam, SEVP presenting a souvenir to Chief
Guest of COAS Open Golf Championship
Players in action at the 7th COAS Squash Tournament
sponsored by Askari Bank
Sports
Education
Social
•
•
•
Sponsorship of 13th, Fina World
Swimming Championships
•
Sponsorship of 2010 World
•
•
•
•
International Conference on Medical
Golf Tournament
Education
2009
•
•
Sponsorship of COAS Open Golf
•
Sponsorship of ITF Pakistan Junior
U-18 Tennis Championship 2009
•
Sponsorship of Pakistan Veteran
Tournament Rawalpindi
•
Sponsorship of Allama Iqbal Open
Golf Tournament 2009
•
Sponsorship of Gujranwala Golf
Championship 2009
•
•
•
•
•
Sponsorship of Children Park at
Istaqlal Camp, Chakwal
•
Sponsorship of F-10 Roundabout,
Sponsorship of Conference on Scopes
of Retail Banking & Finance Expo
Pakistan 2009
Sponsorship of Food, Agri & Livestock
Asia 2009 for E-commerce Gateway
Environment
title of “Telephone a Tree”
Sponsorship of Civil Aviation
Authority special publication issue.
•
Sponsorship of a Campaign under the
Sponsorship at Dawn Life Style
Exhibition 2009
Development Program, Karachi
•
Sponsorship of All Pakistan Memon
Exhibition, Karachi
Sponsorship of Zenith Leadership &
Championship 2009
Sponsorship of 19th, All Pakistan
Multan Open Golf Championship
Sponsorship of TNS Film Festival
organized by BPS, School, Lahore
•
•
Sponsorship of Old Ravians Union
event through publication
Sponsorship of COAS 7th
International Squash Championship
•
•
Sponsorship of ASF Annual
Exhibition / Meena Bazaar
Sponsorship of Lahore Grammar
School’s Annual Play 2009
Sponsorship of All Pakistan Garrison
Open Golf Tournament
•
Sponsorship of Exhibition on
Sponsorship of 29th Punjab Open
Sponsorship of 7th Chief of the Army
•
Educational Convention
Staff (COAS) Squash Championship
•
Sponsorship of branding for Islamic
Sponsorship for CILT Pakistan’s
International Seminar
the Old Hailians Association
Championship Qualification
Tournament, held in 2009
Sponsorship of Annual Function of
Pakistan.
•
Sponsorship of Islamic International
Medical College (IIMCT)
•
Sponsorship of print/media
campaign for IDPs
Islamabad
•
Sponsorship of Park at Commercial
Area, DHA, Lahore Cantt
•
Sponsorship of Spring Gala organized
by M/s ECI (Pvt) Ltd
page | 23
In line with the expectations of
a modest recovery in economic
growth, the prospects of returning to
macroeconomic stability improved in
the initial months of fiscal 2010 with
most key indicators continuing with
the positive trends, which began in
the closing months of fiscal 2009.
Improvement in agriculture and the
industrial sectors backed by reduction
in inflation, contained government
borrowings, contraction in external
imbalances and, easing monetary
stance, are all likely to support
economic stability during the current
year. Though, a drop in overall volume
of trade, tax growth, risk of lower than
expected aid receipts and, in particular,
a rise in the fiscal deficit, highlights
the fragility of the improvement and
pose continuing risk to the economic
recovery. In this environment, funding
under the IMF Program has been a
key for the recent improvement in
Pakistan’s foreign exchange reserves.
Going forward, the major impetus
for economic growth is expected
to come from the services sector.
The current account deficit is likely
to improve further. However, given
the current circumstances arising
from the campaign against militants,
the situation remains challenging
and demands continuation of fiscal
page | 24
discipline, sound macroeconomic
policies and focused attention towards
the betterment of infrastructure and
social sector indicators to ensure that
the economy maintains its long term
growth trajectory.
2009 witnessed gradual easing of the
monetary policy stance that was aimed
to counter inflationary and demand
pressures, which were achieved to
a greater extent. While the liquidity
position greatly improved compared
to last year, the risk averseness of
financial system restricted credit
growth to a large extent and instead
preferred short term liquidity
management avenues. Deposit
mobilization by banks improved and
showed signs of recovery towards the
end of 2009 and it is anticipated that
the position will improve further during
2010.
Alhamdulillah, Askari Bank achieved
planned growth in business and
operations during 2009. The total
assets of the Bank amounted to
Rs.254 billion as at December 31, 2009,
registering an increase of 23 percent
over December 31, 2008. The major
increase in asset book was recorded
in aggregate investment portfolio
that grew by 88 percent during 2009,
while the gross advances increased
by 6 percent, to Rs.148 billion from
Rs.140 billion at end 2008. The Bank
continued with the cautious and
selective approach while taking credit
exposures and remained focused
on risk management and portfolio
diversification. The efforts for effective
loan portfolio diversification which
started last year yielded further
positives and during 2009, the Bank’s
exposure in textiles, which sector
has largely remained under pressure
owing to various internal and external
developments, was reduced to 18
percent of the total portfolio, compared
to 20 percent at the close of the
previous year. Also, the Bank preferred
financing against collaterals which
improved our capital adequacy in
compliance with Basel II requirements.
Customer deposits reached Rs.206
billion by December 31, 2009, an
increase of 23 percent over December
31, 2008. The deposit type and currency
mix remained almost consistent with
last year except savings deposits
that reached 54 percent of the total
deposits compared to 48 percent at
the close of 2009. During the year, the
Bank’s efforts remained focused on
improving the core deposits. For this
purpose a deposit mobilization plan
Advances and Deposits
(Rs. in million)
(Rs. in billion)
2009
was launched for Bank employees
that yielded excellent results and
contributed to overall improvement
in core deposits. Also, the deposit
products launched towards the end
of 2008 gained further strength and
were also a reason for increase in core
deposits during 2009.
The earnings of the Bank remained
under pressure during 2009, mainly
due to increased non-performing loans
(NPLs) and related provisions, subdued
economic conditions and carry-over of
losses from stock market. The scope of
the benefit of forced sale value (FSV) of
collaterals, which was reinstated last
year, was further expanded, subject to
certain conditions, by the State Bank
of Pakistan (SBP) in 2009 with the
addition of certain types of collaterals
and allowing the benefit of up to 40
percent of FSVs for computation of
loan loss provisioning against NPLs.
This relaxation was fully accounted for
while computing loan loss provisions
during 2009. Profit after taxation at
Rs.1.11 billion, however registered
marked improvement when compared
with last year’s Rs.386 million, an
increase of 187 percent. The banking
spread registered slight improvement
over last year, despite absorbing
the adverse impact on net markup income due to increased nonperforming advances, thus reflecting
effective asset liability management
during 2009. The Bank’s NPLs stood
at Rs.17.73 billion as of December 31,
2009 compared to Rs.11.69 billion at
the end of previous year, an increase
of 52 percent. Aggregate provisions
2004
86
83
2008
Profit After Tax
2005
Advances - net
2006
2007
2008
135
129
143
132
101
2007
99
2006
Profit before tax
70
1,642
1,108
461
386
Operating Profit
119
4,557
4,534
6,222
2,300
2,681
3,461
2,859
2,022
2005
4,476
3,347
2,250
3,158
2,843
1,923
2004
Corporate and Investment Banking
Group successfully raised Rs.3.0 billion
as Tier II capital i.e. sub-ordinated debt
in the form of Bank’s third issue of
Term Finance Certificate (TFCs).
168
206
Profits
2009
Deposits
as of December 31, 2009 increased
to Rs.12.59 billion, thus providing
coverage of 71 percent against nonperforming loans as of December 31,
2009. To expedite recovery of nonperforming and classified loans, a
dedicated Special Asset Management
(SAM) division has been set-up and is
aggressively monitoring and followingup problem accounts. During 2009, the
Bank’s efforts resulted in substantial
improvement in the recovery position.
SAM will continue to actively pursue
recovery from defaulting customers.
The valuations of our investment
portfolio, which primarily comprise of
SLR (statutory liquidity requirement)
eligible securities and other equity
and debt securities, improved with
the adjustment of 250 basis points
announced by the SBP in the policy
rate at three intervals during 2009.
These and other timely steps by
the SBP, supported by moderation
of demand pressures improved the
market liquidity management. Under
these circumstances, our treasury
management remained prudent and
operated competitively during 2009.
Our corporate and investment banking
group gained further strength and
increased its share in business
volumes of the Bank. The group is well
positioned to service large corporates
and multinational companies through
a range of multifaceted offerings which
include syndicated finance, advisory
services, and discretionary investor
relations besides trading in equity and
debt markets. During the year, the
Our consumer banking offers
products and services, mostly
asset based, to the retail customer
segment along with Askari credit
card, using the MasterCard brand.
During 2009, the consumer banking
focused on consolidation of business
and operations and repositioned
itself under the changing business
environment for this segment.
As part of this process, product
automation was assigned priority
and a few products, which were
previously offered under a distributed
model, were centralized with the
aim of improving customer service
and operational controls along with
process efficiencies. Our consumer
banking plans to further diversify
and expand the scope of its services
through optimization of technology
and targeting untapped opportunities
of the retail banking market which still
offers potential for growth.
The agriculture and rural banking
services offered by the Bank gained
momentum during 2009 on the back
of innovative offerings, capacity and
awareness building, and increased
market penetration. Askari Zarai
Credit Card launched in the previous
year as the first ever credit card for
agriculture purposes gained further
strength and attracted more interest
from this segment. Also, groupbased lending methodology has been
adopted to facilitate small farmers
availing agriculture credit. During the
year, our agri & rural business division
(ARBD) won the first position in
diversification of credit Products from
MINFAL, Government of Pakistan, and
also received certificate of appreciation
from SBP regarding Development of
SBP Crop Loan Insurance Framework.
Askari Islamic banking further
expanded its outreach during 2009
by adding eleven new branches to
page | 25
Advances
(Rs. in billion)
(Rs. in billion)
101
83
70
86
143
132
14.1%
99
168
CA
119
CAGR
206
8.9%
GR 1
129
Deposits
135
President’s Message (cont.)
2006
2007
2008
2009
Total Assets
2004
2005
8.5%
%
18.2
100
105
119
140
148
AGR
rts: C
Expo
AGR
es: C
ante
Guar
2005
2006
2007
2008
2009
the network of our independent
Islamic branches. During the year,
Askari Islamic banking successfully
achieved a milestone by initiating and
successfully converting a conventional
banking branch into an Islamic
banking branch. Such conversion will
be further extended to other towns
and localities where the demand for
Islamic products and services has
gained strength and has outgrown
the demand for conventional banking
products and services. Askari Islamic’s
comprehensive range of Sharia’a
compliant banking offerings are now
available at thirty one branches.
Despite the strain on earnings
attributable to network expansion,
Askari Islamic’s contributions to
operating profits increased during
2009.
During the year under review, the Bank
remained focused on improving risk
management which we consider to be
one of the essentials for sustainable
success in today’s banking business.
The risk management function was
further strengthened in line with the
31
25
2004
2005
Imports
Exports
44
56
59
83
75
70
98
92
AGR
rts: C
Impo
%
13.3
119
254
206
182
166
18.9%
107
145
2009
2008
(Rs. in billion)
CAGR
page | 26
2007
Foreign Trade and Guarantees
(Rs. in billion)
2004
2006
97
2005
37
2004
2006
2007
2008
2009
Guarantees
risk management guidelines issued by
the SBP; a risk management strategy
has been developed for identifying,
assessing, controlling and monitoring
risks. Our risk management processes
comprise of detailed risk reviews,
application of analytical tools and
techniques along with traditional
methods to quantify value at risk and
monitor potential risks, independent
risk assessments covering all types
of risks including credit, market and
liquidity risk performed by a well
resourced risk management function.
The Bank has already commenced
the most ambitious and challenging
project in its history, of upgrading the
entire technology platform. During
the year under review, our dedicated
teams involved in the implementation
along with our implementation
partners achieved planned progress
and milestones. Keeping in view the
size and significance of this project,
relevant details have been separately
documented in this annual report,
titled under ‘technology initiative’.
Briefly, the Bank has acquired Oracle
Financial Services Software
(OFSS) (previously flexcube)
as the core banking software
with the key objectives to (a)
improve business management,
(b) upgrade customer service,
(c) strengthen the internal
control environment, and (d)
improve quality and timing
of financial and non-financial
information. In addition to OFSS,
the Bank is also implementing
Oracle Financial as MIS and
Supply Chain Management
software, PeopleSoft as human
resource management software,
Reveleus as risk management
software and Siebel as customer
relationship management
software. These softwares will
be fully integrated with OFSS
and collectively strengthen our
product and service delivery
capacity while improving the
overall operational and internal
control standards. We are fully
aware of the huge challenges
involved in this project and have
assigned the highest priority to this
program backed by the deployment of
the required means and resources for a
timely and successful implementation,
which will be under close watch for
further support.
During the year under review, the Bank
achieved ISO 27001 certification. The
certification audits of the bank were
conducted during 2009 under the
approved scope of this assignment and
after completion of procedural changes
in the relevant business processes,
British Standards Institutions (BSI)
awarded Askari Bank ISO/ IEC
27001:2005 Certification, thus making
Askari Bank the first Bank in Pakistan
to be awarded this prestigious
certification.
Askari Bank recognizes its employees
as the prime asset and the key
contributors to the performance of the
Bank and places great emphasis on the
attraction, development, motivation
and retention of its employees. Our
organizational development program
which mainly comprised of various
human resource initiatives, was
completed during 2009, although
work in certain areas will continue as
improvement in employee satisfaction
and motivation is an ongoing process.
In the first phase, all human resource
policies were reviewed and revised
to attain alignment of compensation
and benefits with the market. After
announcing the first layer of revised
organization structure which included
restructuring of certain divisions/units
for better business and operational
efficiency, the process was cascaded
to all groups / divisions / units
during the year under review. An
exercise to identify unique jobs has
been completed and job description
documents have been developed. On
the one hand this will ensure effective
placement of staff, standardization
and rightsizing, and on the other, it
will enable employee goal setting
which is the primary requisite for an
effective performance management
system. A comprehensive performance
management system based on well
defined goals and responsibilities
has been implemented across the
Bank. Going forward, compensation
and benefits will be based entirely on
employee performance.
Also, employees’ professional
development remains one of the key
elements of our human resource
strategy. To keep abreast with
technological development and
other advancement, human capital
enrichment through extensive
in-house and external training is
indispensable. During the year, various
training programs were conducted for
Bank employees through in-house
training academies in Rawalpindi,
Lahore and Karachi, and external
training facilitates both local and
international. We remain committed
to provide ample opportunities for inhouse and external trainings that will
enable our employees to improve their
skills and professional competence.
During the year, the Bank remained
focused on consolidation than
expansion and restricted additional
branches to twenty six compared
to fifty branches opened last year,
increasing our number of branches
to 226 branches, including 31 Islamic
banking branches and an wholesale
bank branch in Bahrain. The strategic
branch expansion will continue;
however the process will be gradual
and selective, as under the current
economic and business conditions,
our emphasis will be on consolidation
of expansion achieved by the Bank in
recent years.
The performance of Askari Investment
Management Limited (AIML), which is
a wholly owned subsidiary of the Bank,
was subdued mainly due to adverse
market conditions for mutual funds
and asset management companies.
Although the stock exchange index
improved by almost 64 percent during
the year under review, mutual funds
continued to face huge withdrawals
and consequently asset management
companies came under severe stress.
It is anticipated that the stability
in stock exchange index will lead to
gradual turnaround for mutual funds
industry.
The Country’s economy is showing
important gains for overall
macroeconomic stability but
maintaining these gains and ensuring
continuity of the nascent economic
recovery remains challenging for the
economic managers during 2010. Given
the situation and challenges faced
by the Bank, certain areas have been
identified as key strategic priorities
for 2010 and have been cascaded
down the line. Also, a comprehensive
review and monitoring mechanism
has been put in place for timely
identification of gaps and corrective
measures. I am confident that Askari’s
management team will continue to
work with dedication and hard work
to accomplish our collective vision – to
become the bank of first choice in the
Region, and continue to strive for every
possible opportunity to add value for
our stakeholders.
I am pleased to inform that with the
receipt of final approval by the SBP
on February 18, 2010, Askari Leasing
Limited (ALL) is set to amalgamate
with and into Askari Bank Limited
with effect from March 3, 2010.
Army Welfare Trust is the Sponsor
shareholder of both companies and
the amalgamation will synergize
business and operations at the group
level and will bring economies of
scale. Customers of ALL will enjoy a
comprehensive range of commercial
banking products from the network of
over 226 branches of the Bank while
the customers of the Bank will be
benefited by the addition of leasing to
our product offerings.
My sincere appreciation to the Board
of Directors for their unstinted cooperation over the year. They have
taken keen interest in the affairs of
the Bank and in formulation of policies
and had been an immense source of
support and guidance to me during
the year. I thank them for the wise
guidance and counsel extended to
me in managing the affairs of the
Bank. Also, I thank the State Bank of
Pakistan for providing guidance on
policy and operational matters which
in fact enhanced the professional
capabilities of the Bank.
The loyalty of our customers has been
very encouraging despite intense
competition. This situation has helped
us maintain a competitive edge and
market share over the years. I thank
them for the confidence they continue
to place in us.
I would like to thank all stakeholders
for the trust and confidence they
continue to place in Askari Bank.
M. R. Mehkari
February 23, 2010
page | 27
Technology
Initiative
Askari Bank has embarked upon
a major initiative of overhauling
its technology infrastructure with
the aim of upgrading business
and operational capabilities while
improving quality of customer service.
For this purpose, five new software
application products have been
acquired and are currently in different
stages of implementation. These
include a Core Banking System, a
Risk Management System, a Human
Resource Management System,
a Supply Chain Management /
Enterprise GL System and a Customer
Relationship Management System.
These systems are well recognized
and are considered to be the best of
the breed in their respective areas.
Although implementation of
all these applications has been
undertaken almost simultaneously,
the major focus of the Bank is to
achieve a transformation of its core
banking business. While the system
currently in use has admirably
served the Bank over the years,
it is now considered obsolete. By
implementing the new core banking
system, the Bank plans to achieve a
paradigm shift of its focus towards
customers. The old system relied
on ‘accounts’ as the focal point for
customer relationships, whereas the
new system is structured to give a
single view by linking all accounts
and services availed by a customer.
In other words, customer would
become a ‘bank customer’ as against
a ‘branch account holder’, while all
Bank branches and alternate delivery
channels will be at par for delivering
consistent service irrespective of their
geographical location.
page | 28
The new system offers many
functionalities which are rich in
coverage and processing capabilities.
It is a centralized application which
will run in a central data center and
users will simply access it through
a communication network. In
recognition of the centralized nature
and round-the-clock availability
of the new system, the Bank has
also undertaken an upgrade of
its computer processing and data
communication network capabilities.
For this purpose, a state-of-theart central data center is under
preparation. Adequate computer
hardware and redundant support
services such as power supply,
power continuity, air-conditioning,
security, etc., are being arranged.
Once completed, the data center
is expected to become a reference
site. To improve reliance on data
communications, the existing network
is also being upgraded not only by
increasing bandwidth for users,
but also introducing redundancy to
prevent discontinuation of services
because of network failures. Another
aspect of the centralized processing
would be a disaster recovery center
which can take over centralized
operations with minimal down time
to attain business continuity.
While enhancing customer services,
the new core banking system will
facilitate our employees to be better
equipped by providing them with
effective planning, monitoring and
controlling tools. It will also enable
the Bank to launch new products and
services quickly, and gain competitive
advantage. With the new systems,
the workflows at our branches will
undergo a transformation as users
will have all relevant information
on their screens as against reliance
on paper. The new system will
also replace many sub-systems
implemented over the years.
Implementation of the new
core banking system is
planned in phases. In the first
phase most products and
services in our conventional
branches are being addressed
while in the second phase
Treasury and Islamic Banking
services will be covered. In
view of the old system being
decentralized and its reliance
on branch based servers, rollout of the new system will be
gradual over the entire branch
network with all branches
of the Bank planned to be
converted to the new system
within two years of the first
branch going ‘live’ during the
first quarter of 2010.
Amongst the other
applications, the Supply
Chain Management System
is expected to transform the
procurement process using
electronic workflow over the
Bank’s data communication
network. This system will
also provide an Enterprise GL
for the Bank and will be able
to integrate information from
various sources to compile
the overall position of the
Bank for reporting to the
regulators as well as for the
management. This system will
also be maintaining an up-todate inventory of Bank’s fixed
assets in a central database.
The Human Resource
Management System will
enable the Bank to maintain
an elaborate database of its
workforce. It will enable the
human resource function
to manage its work in a
highly efficient manner
with functionalities such as
employees recruitment, payroll
management, performance
appraisal, training, etc. This
system will consolidate and
upgrade many functions,
currently carried out through
the use of disparate systems
and procedures. Line
managers will also be able
to view relevant information
about their respective
staff through the data
communication network and
thereby manage their staff
more efficiently.
The Risk Management System
will enable the Bank to achieve
compliance with the central
bank’s directives in this area
and will help the Bank’s
management to be able to
manage risk in a scientific and
organized way. It will help
the Bank to achieve Basel-II
compliance in line with the
Bank’s policy and regulatory
directives.
The Customer Relationship
Management System
acquired by the Bank has
vast capabilities and will be
absorbed into the Bank’s
working in phases. In the first
phase it will be deployed to
achieve workflow based credit
approval in the consumer
banking area and also provide
single view of the customer
to the call center agents
as well as branch staff and
relationship managers.
The use of technology in the business
of banking has become very central
and many services being offered
by banks cannot be conceived if
proper technology is not deployed
to support the same. While Askari
Bank has prided itself in the use of
appropriate technology throughout
its history and has achieved many
“firsts” in the past in the use of IT,
the Bank has, yet again, decided to
leapfrog competition in many areas
by undertaking the ambitious plan
for technology enhancement and
upgrade the benefits of which will
become visible in the near future. The
Bank recognizes that the technology
upgrades is an ongoing process and
plans to keep abreast of the latest
developments to introduce the
best products and services for its
customers in the future.
page | 29
2009
Rs. in ‘000
2008
Percent
Rs. in ‘000
Percent
Value Added
Income from banking services
Cost of services
23,121,122 14,188,630 18,951,365 10,763,100 Valued added by banking services
Non-banking services income
Provision against non-performing assets
8,932,492 35,797 (2,914,893)
8,188,265 26,548 (4,072,597)
Total value added
6,053,396 4,142,216 Value Allocated
to employees
Salaries, allowances and other benefits
3,765,197 62.2 3,169,771 76.5
to providers of capital
Cash dividend
Bonus shares
– 1,071,240 –
17.7 –
1,014,693 –
24.5
1,071,240 17.7 1,014,693 24.5
to government
Income tax
534,448 8.8 75,157 1.8
to expansion and growth
Depreciation
Retained in business
645,958 36,553 10.7 0.6 511,063 (628,468)
12.3
(15.1)
682,511 11.3 (117,405)
(2.8)
6,053,396 100.0 4,142,216 100.0
Total value allocated
62%
18%
2009
9%
11%
77%
2008
24%
2%
–3%
-10%
page | 30
0
10%
20%
30%
40%
To employees
To providers of capital
To government
To expansion & growth
50%
60%
70%
80%
Our presence,
in all corners
of Pakistan,
is more than
just being
there
North Region
Islamabad
Rawalpindi I
Rawalpindi II
Peshawar
Azad Kashmir
Corporate
Islamic Banking
15
16
11
13
8
1
8
72
Central Region
Lahore I
Lahore II
Sahiwal
Faisalabad
Gujranwala
Multan
Corporate
Islamic Banking
12
11
7
11
11
11
1
12
76
South Region
Karachi I Karachi II
Karachi III
Karachi IV
Hyderabad
Quetta
Corporate
Islamic Banking
10
10
11
11
14
9
1
11
77
Wholesale
Bank Branch (Bahrain)
Total branches /sub-branches
1
226
Branch contact details are given on page 194 to 201
page | 31
Business and
Operations Review
The performance of Askari Bank during
2009 showed marked improvement over
the previous year despite non-conducive
business conditions prevalent during most
of 2009. The Bank was able to prudently
manage the risks and returns despite
subdued credit demand and continued
pressure on banking margins. Also, the
growing non-performing loans demanded
focused handling. In addition to the core
commercial banking activities, the Bank
was able to derive considerable gains
through active management of money
market, equity and debt management
portfolios.
Consolidation of business and operations
was the key element of our strategies
during 2009 greater focus was placed
on strengthening policies, processes,
controls and workflows. The technology
transformation initiative that the Bank has
embarked upon is in an advanced stage of
implementation; the benefits are expected
to emerge in near future in the form of
improvement in service quality, customer
offerings, process efficiencies, internal
controls that will further strengthen our
capabilities and readiness for future
challenges.
page | 32
Corporate and
Investment
Banking
CIBG offerings aim towards
the Bank’s large corporate and
institutional customers, including
public sector entities. Such offerings
range from products for meeting
operational funding requirements, as
well as a suite of structured finance
products and services related to
strategic expansions, divestments,
syndications, project finance,
underwriting, cash management,
and trade finance related services.
The Group operates through the
Corporate Banking Division (CBD)
and an Investment Banking Division
(IBD) based upon a client-centric and
distribution-focused business model,
supported by a culture that prioritizes
client relationships and economic
returns through a structure that
enables an integrated, multi-product
services.
The combination of CIBG’s industry
expertise, strong balance sheet and
innovative product structuring allow
us to meet the evolving needs of our
ever-growing client base.
Year 2009 marked the first full
year of CIBG operations through
three focused Corporate Centers
/ Regions in Karachi, Lahore and
Islamabad, thus concluding the bank’s
comprehensive transformation
agenda in this business area.
The Corporate Banking Division
(CBD) works under the customer
relationship management model
on a long-term relationship based
business concept. It provides
high quality services to its valued
customers at a single point within
the Bank for meeting all business
requirements of its large size
customers, with the primary objective
of enhancing customer service, whilst
also improving the underlying risk
of the portfolio. CBD strategically
present in all major corporate hubs of
the country.
The challenges to corporate business
in the year 2009 were manifold
including reduction in private sector
credit off-take as a result of slowing
down of economy. In line with the
Bank’s strategy of consolidation,
Corporate Banking Division (CBD)
strategy was focused towards
maintaining and strengthening
existing corporate relationships while
meeting the business requirements
of its large size customers, with
the primary objective of enhancing
customer service and also improving
the underlying risk of the total
portfolio through development
and cultivation of relationships
with externally rated entities /
corporations thus enabling the Bank
to maximize risk adjusted returns on
capital deployed through CBD.
The Investment Banking Division (IBD)
focuses on origination and execution
of a full range of financial advisory
and capital raising services to
corporate and institutional clients as
well as actively managing the Bank’s
proprietary investments in the local
equity and debt capital markets.
During 2009, the IBD team remained
actively involved in lead arranging and
structuring a number of innovative
and high profile debt arrangement
and project finance transactions
for a client base ranging from large
corporate, multinational companies
and public sector entities.
CIBG teams work hand in hand
to identify and deliver through a
combination of basic and structured
product offerings including but not
limited to:
• Term Finance Facilities;
• Working Capital Financings;
• Structured Trade Finance Facilities;
• Guarantees;
• Letters of Credit;
• Fund Transfers / Remittances;
• Bill Discounting;
• Export Financing;
• Receivable Discounting;
• Corporate and strategic advisory
services;
• Loan Syndications;
• Project Finance transactions;
• Equity financings;
• Debt swaps;
• Balance sheet restructuring
services;
• Debt and equity financing options
through Capital Markets.
page | 33
Business and Operations Review (cont.)
Consumer Banking
Services
have started yielding results and the
key performance indicators for this
business have started to register
notable improvement.
Going forward, with the improvement
in economy, our consumer finance
shall be focusing on expanding target
market and enhancing our portfolio
through new and improved initiatives
and products. Special attention is
being given to business opportunities
involving strategic alliances that
will earn sustainable returns. Also,
greater emphasis will be placed on
secured form of consumer lending.
We believe that with these measures,
CBSD is positioned to increase
product offerings while improving and
maintaining a quality of its risk asset
portfolio. CBSD’s current product
offerings include:
• Credit Cards (Platinum, Gold, Silver,
Zarai & Corporate)
• Askari Bank’s Personal Finance.
• Smart Cash ( Running Facility for
customers)
• Askari Bank’s Mortgage Finance
(Home loans)
• Askari Bank’s Business Finance
(Business loans)
• Askar (Auto loans)
• Flexible Credit Plan.
• AskCard (Askari Debit Card)
Consumer Banking Services Division’s
products and services mostly
comprise auto finance, personal
finance, mortgage finance, Askari
Credit Cards under the MasterCard
brand, Askari Corporate Credit Cards
and Zarai Credit Cards.
The consumer finance segment
adversely affected by the recent
phenomena of inflation and changes
page | 34
in interest rates. The recent data
suggests further decline to the
already contracting market of this
segment. In this situation, our
consumer banking repositioned itself
with focus on containing the growth
of problem loans and improving
recovery efforts and internal controls.
Also, a very cautious and selective
approach was adopted for fresh
lending during the year. Such efforts
• i-Net Banking (Internet Banking
Services)
• Askari Touch ‘N’ Pay (Electronic Bill
Payment Services)
• Cash Management Services.
• Rupee Traveler Cheques.
• Askari Value Plus (Deposits)
Our success is tied
to our customers’
success....
we win together
page | 35
Treasury and
International
Banking
2009 witnessed relative economic
stability on the back of increase
in foreign exchange reserves,
moderation in inflation and
improvement in fiscal imbalance and
increase in workers’ remittances.
These developments led to the
start of a monetary easing cycle.
The cautious and gradual approach
of monetary policy easing is an
optimal response to the prevailing
economic situation and appears to
be focused on the long term stability
of the financial system. This is also
reflected by the number of policy
announcements which increased to
six during 2009. A new framework of
interest rate corridor was introduced
with objective of better transmitting
the monetary policy signals. These
measures resultantly increased
liquidity and the rates moved to
acceptable levels during the year
under review.
Being cognizant of the developments
on economic and regulatory front,
page | 36
Treasury managed its operations
prudently for maximizing return.
During 2009, treasury operations
increased transactional turnover
on the back of increase in business
volumes and better liquidity position;
the size of treasury book also
increased considerably compared to
the last year.
The efficiency and effectiveness
of treasury operation are being
enhanced by relevant and appropriate
training of the human resource
available with the treasury and
updating of its IT system by
coordinating with vendor to meet the
new challenges and in order to be
more competitive in the market.
International Division plays a vital
role in establishing and managing
multi-faceted correspondent banking
relationships with over 277 banks in
76 countries around the globe thereby
providing a highly professional and
need driven service to the Bank’s
valued global clientele.
During the year, while maintaining
focus on the trade finance
business, the Division also made
concerted efforts to enhance the
volume of workers’ remittances. It
made several arrangements with
various multi-national banks and
exchange companies to promote
home remittances in the country.
This Division is also engaged in
carrying out regular due diligence of
counterparties with the aim to ensure
compliance of ‘anti-money laundering’
and ‘know your customer’ standards
and guidelines.
Wholesale Bank
Operations (Bahrain)
Wholesale Bank Branch’s contribution
towards the earning of the bank
have shown improvement during
2009 despite the global economic
slowdown - net profit for the
year recorded growth of 63%. As a
wholesale bank branch, our Bahrain
operations serve as an outlet to
utilize our foreign currency resources
to generate better returns. It
always endeavors to participate in
appropriate and viable syndication
and other trade businesses emerging
on the international scene. In
addition, our Bahrain operations are
on the constant lookout to evaluate
and explore other areas of business
and investment opportunities with
acceptable risks and maximum
returns.
two sub-branches. During 2009, 11
new Islamic Banking Branches (IBBs)
were opened including the first ever
conversion of a conventional banking
branch. Now IBBs of the Bank are
present in 15 major cities.
Marketing &
Strategic
Planning
This Group was recently established
to strengthened the marketing
and strategic planning function
within the Bank. The main objective
of this Group is to facilitate
the management in competitive
positioning of the Bank in line with
the market dynamics while focusing
on key strategic objectives. The Group
also manages marketing activities
from a central platform aimed to
improve the Bank’s image and also
to serve our communities and society
at large – through corporate social
responsibility projects.
The Group also monitors economic
developments by a dedicated research
desk, created for this purpose, that
also analysis the market in order to
align our business strategies with
competition. The economic research
desk also provides regular updates
on different industries, competition,
money and stock market trends, and
value drivers in order to keep the
management abreast with current
scenarios aiding them in the decision
making process.
In order to ensure a renewed focus
on customer satisfaction the group
endeavors to introduce a service
strategy which would bring to
attention the service grey areas that
lead to customer attrition. A customer
complaint management unit focuses
on customer concerns and addresses
them by plugging the gaps in
processes and workflows.
In the area of strategic planning,
the Group aims to facilitate various
business functions by setting
strategic direction backed by
implementation plans with well
defined goals and timelines that
enables objective monitoring of
such plans. The Group also oversees
product development initiatives,
generally based on market and
customer feedback and also keeps the
existing products under continuous
review using product performance
measurement scorecards.
Islamic
Banking
Islamic banking activities of the
Bank were initiated during 2006.
Despite late starter, Islamic banking
operation of the Bank is now
amongst the top players in its peers
i.e., 13 conventional banks with
separate stand alone Islamic Banking
branches.
The branch network as on December
31, 2009 has increased to 31, including
Despite the strain on profitability due
to ongoing set up of new branches,
the operating profit increased by
77%, which stood at Rs.153.17 Million
compared to Rs. 85.74 Million in the
previous year mainly attributable to
38% increase in net earning spread.
Total deposits increased to Rs.7.46
billion as on December 31, 2009 from
Rs. 5.40 billion as on December 31,
2008 – upsurge of 38%.
In line with Shariah requirements,
the Bank ensures that the funds
and products of Islamic banking
are explicitly managed without any
intermingle with the conventional
banking business. All funds obtained,
invested and shared, are in Shariah
compliant modes of investments.
A comprehensive Islamic Banking
products and services are being
offered by the Bank in order to meet
the customers demand for Shariah
compliant banking, including Islamic
corporate banking, investment
banking, trade finance, general
banking and Islamic consumer
banking. To implement Islamic
banking products in their true letter
and spirit, training in Islamic banking
is given great importance; the staff
of Islamic Banking is fully conversant
with the philosophy of Islamic
Banking and the products being
offered.
An eminent scholar, and recipient of
the President of Pakistan’s medal for
Pride of Performance (in Academics),
Dr. Muhammad Tahir Mansoori is
the Shariah Advisor of the Bank. He
is currently the Professor and Dean
of the faculty of Shariah and Law at
the International Islamic University,
Islamabad.
page | 37
Agriculture
Banking
During 2009, Agriculture and Rural
Business Division (ARBD) gained
further strength with improved
and efficient delivery and control
mechanism for meeting increased
demand for credit by the farmers
in easy, accessible and affordable
manner. Our innovative product
range for this segment is best rated
in the market. The Bank surpassed
its allocated targets for agriculture
financing by 102% during the
financial year 2008-09. Aggregate
disbursements increased by 43% and
outstanding advances by 9% while
the overall spread also registered
improvement over previous period.
During the year, while focusing in
business development, this unit
also achieved further refinement
in back office processing including
credit initiation, operations, risk
management, in line with the
business dynamics and regulatory
framework. ARBD remains proactively
engaged with its stakeholders for
aggregation of services and improving
page | 38
•
Askari Kissan Livestock
Development Finance.
•
Askari Kissan Farm
Mechanization Finance.
Some of the milestones achieved by
ARDB during the year include:
•
Askari Kissan Aabpashi Finance.
•
Green House & Tunnel Finance.
•
Won first position in
diversification of credit products
from MINFAL (GOP)
•
Farm Storage Finance.
•
Model Dairy Finance.
Received certificate of
appreciation from SBP regarding
development of SBP Crop Loan
Insurance Framework.
•
Gold Fish Finance.
•
White Pearl Finance.
•
Murghban Finance.
Contributed in developing SBP
guidelines for Islamic agriculture
financing, livestock financing,
small farmer group financing.
•. Samar Bahisht Finance.
life standard of farmers through
its distribution network, currently
extended to 89 branches across the
country.
•
•
•
Coordinated with Federal
Government for the development
of Shaheed Benazir Bhutto Card,
Asian Development Bank funded
agribusiness development &
diversification project.
Our agriculture credit brand includes:
•
Askari Kissan Evergreen Finance.
•
Askari Kissan Tractor Finance.
•
Askari Kissan Transport Finance.
•
Gulban Finance.
•
Asan Mali Sahulat,
•
Zarai Credit Card.
Operations
The primary aim of Operations
Group is to provide a supporting
platform to all business segments on
operational matters across branches
and business units, by strengthening
internal control environment, while
contributing towards effective
decision making and extended
guidance on operational matters.
The Bank’s decision to replace the
existing IT platform with the most
modern and sophisticated system i.e.,
Flexcube, a core banking software is
a major step in this direction, which
is currently being actively pursued for
implementation.
Operations Group consistently
strives to bring improvement in
internal controls and provision of
uninterrupted services to customers.
During the year 2009:
•
Various processes were reviewed
and updated that include
introduction of personalized
cheque books, automation of
clearing settlements, enhanced
due diligence measures in
account opening and transaction
monitoring, etc.
•
On various occasions of riots,
business continuity was secured
through successfully shifting
operations to alternate sites
thereby ensuring provision
of uninterrupted services to
our valued customers without
compromising on quality.
•
Setting up of Centralized
Foreign Trade Units (CFTUs)
was completed; an another
milestone achievement. The
outreach of CFTUs was expanded
to all branches dealing in foreign
trade, thereby providing effective
control over trade related
transactions.
Our mission is to achieve sustained
performance, characterized by extra
ordinary initiative & creative ability, in
order to optimize the way operations,
people and technology work together
to achieve desired results.
page | 39
Credit and
Asset Quality
Due to overall economic slowdown
and its effects on large scale
manufacturing industry, the credit
growth during 2009 remained
subdued. During the year under
review, the gross advances of the
Bank registered a growth of 6% which
increased from Rs.140 billion to
Rs.148 billion. The Bank remained
selective in taking credit exposures
and focused on risk adjusted returns
and quality and nature of collaterals
to achieve improvement in capital
adequacy ratio. During the year, the
non-performing loans swelled to
12% of the gross advances compared
to 8% at end 2008. This negative is
attributable to a variety of adversities
including slowdown in trade –
mainly exports, power outages, slow
credit off-take, security challenges
hampering investment climate and
overall decline in business activity.
In this situation, our focus remained
on recovery and during the year
page | 40
under review, substantial recovery
was made with active monitoring
and follow-up. At the yearend 2009,
aggregate provisions covered 71% of
the non-performing loans.
management of the accounts. Also,
early warning system was improved
for timely identification of problem
accounts to and proactive addressing
of the issues.
The Bank has endeavored to be
the strong market player and has
build market share through offering
superior services, competitive pricing,
and a wide product range to its valued
clients. The Bank caters to the needs
of small, medium, SME, Commercial
& large corporate, multinational
companies including private and
public sector entities.
The bank has strived to maintain a
well collateralized and diversified
optimal mix of loan portfolio relative
to its capital, customer deposit base,
and risk appetite.
The key objective has been to make
risk management a core competency
of the organization to ensure that
risks are accurately identified &
assessed, properly documented and
approved, and adequately monitored
& managed in order to safely
enhance our earnings. The evaluation
and appraisal system comprises
of well-designed multi-tier credit
appraisal procedures, with extensive
guidelines, covering the qualitative
and quantitative aspects of credit
evaluation. The scope of appraisal
system further extends to remedial
Risk
Management
Risk Management is a core function
at the Bank that performs critical
activities of measuring, monitoring,
controlling and reporting credit,
market, liquidity, operational and
other risks. The risk management
framework of the Bank covers (i)
risk policies and limits structure,
(ii) risk infrastructure and (iii) risk
measurement methodologies.
During the year under review, the
focus of our risk management
remained on implementation of
policies / strategies and creating
awareness that every employee is a
risk manager at his / her workplace
thus invoking the importance of the
role in the overall risk structure of
the Bank. The Bank’s credit initiation
and approval process has been
strengthened by introducing models
to cover cash collateral and SME
exposure. Now, our internal credit
rating model covers a wide array of
products spread across the corporate,
commercial and SME portfolio
spectrum. Further, obligor risk limits,
risk pricing and industry-sector limits
have been established to mitigate
over-concentration in a particular
segment. The scope of market risk
reporting has been extended to
include market risks in the banking
book as well as trading book. The
scope of the value at risk (VaR) model
is being enhanced to include, inter alia,
corporate debt in the trading book.
The Bank has developed new stress
testing approaches and is aiming for
systematic implementation thereof.
The Bank seeks to adopt a holistic
approach to market risk by taking
into account correlations, in order to
generate unified risk metrics for the
trading book as a whole. The Bank
has developed and deployed tools and
techniques in measuring operational
risk such as risk and control self
assessment, loss data analysis and
operational key risk indicator with aim
to reduce operational losses, improve
performance measurement, ensure
better control of operations, provide
early warning of gaps in internal
controls and enhanced security
measures.
The Bank has also established a
comprehensive Operational Risk
Management framework based
on appropriate risk management
architecture. The framework assesses
and measures the operational risk
arising from system, people and
processes. To minimize the impact
of unexpected events on business
operations, the Bank has invested
in enhanced physical security and
collaborated with a security agency to
improve protection of branches and
staff.
Electronic
Technology
Our strength in the area of
information technology (IT) based
service has always been an edge
in the competition and has been a
source of considerable strength in the
expansion and management of the
customer base of the Bank.
In line with our policy of providing the
most modern and convenient banking
services, Askari Bank has initiated the
process of replacing the technology
platform which has been separately
described in this report.
page | 41
Besides the new initiatives, the
Electronic Technology Division (ETD) is
responsible for managing the legacy
systems which include automated
branch banking operations, efficient
delivery of customer services through
branches as well as alternate
delivery channels, facilitating intrabank electronic communications
and arranging an efficient MIS for
operational management, decision
making and regulatory reporting.
Its activities include supporting
the existing branch based banking
system installed in the branches
and delivering 24/7 banking services
through the Bank’s ATM network as
well as through internet banking and
call centers. ETD is also responsible
for developing and maintaining
computer software application
systems to meet the requirements
of business and operations and to
support launch of new products and
services.
In order to implement the new
centralized applications, a separate
building has been acquired in
Islamabad for ETD where a stateof-the-art data center is being
established. All new systems
currently under implementation as
well as the existing applications will
be run out of the new data center
which is planned to be operational in
March 2010.
During the year, ETD successfully
implemented a third party software
system for Consumer Banking
Services Division thereby enabling
them to manage their portfolio
effectively. ETD also achieved
installation of 34 additional ATMs
raising the total number of the Bank’s
ATMs (including third party ATMs)
to 194. Besides, 5 new conventional
branches, 11 new sub-branches
and 10 new Islamic branches were
added to the network. Other projects
page | 42
completed during the year included
launch of VISA Debit Card, adoption
of Lotus Notes Email system and
implementation of a central database
of the exiting branch based banking
system.
The data communication network of
the Bank was extensively overhauled
for improving the connectivity
between the branches and other
offices with ETD. Besides increasing
bandwidth, a number of branches
were provided dual links. A number
of security features were introduced
in the data communication network
which include installation of firewalls
at all branches, implementation of
an Enterprise Anti-Virus system and
an IT assets monitoring system over
the network. Another important
achievement was establishment
of a Disaster Recovery Center for
replicating the central servers to
achieve business continuity.
Besides making the new applications
‘live’ and smooth rollout to all
branches of the Bank, integration
of Islamic banking system with the
Bank’s ATM network, upgrading of
internet banking, implementation
of a new version of Credit Card
Management system, integration
of the two call centers, shifting of
existing operations to the new ETD
premises, activation of the new
Data Center and establishment of a
Disaster Recovery Site in another city
are amongst ETD plans for the near
future.
Information
Security
The prime objectives of establishing
Information Security Division (ISD) is
to manage the Bank’s Information
Security System (ISMS) in strict
compliance with the international
standards of confidentiality, integrity
and availability by adopting an
integrated approach to information
security risk management with
an objective to achieving the ISO
international certification.
The Division made all out efforts
in developing and implementing
related policies & procedures at the
selected areas within the scope of
ISO certification. Extensive training
was imparted to the designated
Information Security Managers
for creating awareness and clear
understanding of the significance of
information security within the Bank.
During 2009, the Bank achieved this
milestone and the British Standards
Institution (BSI), a leading global
provider of independent thirdparty certification of management
systems awarded our Bank ISO/
IEC 27001:2005 Certification, thus
making Askari Bank the first Bank
in the Pakistan banking industry to
be awarded with this prestigious
certification. This certification will
further strengthen our relationships
with foreign / local correspondents,
enhance banker – customer
relationship and build confidence
amongst stakeholders.
Recently, ISD has been tasked
to creating and designing the
infrastructure for the implementation
of ‘Enterprise Architecture’ (EA)
within the Bank; lay out and structure
have been designed while detailed
work on development of processes,
selection of technologies, applications,
information assets, locations, needs,
and information gathering have been
initiated.
Our People
Human capital of the Bank is given
the highest value in the aim to
achieve its mission of being the
Bank of first choice. Accordingly, the
Bank’s focus remains on employee
development coupled with improving
the ambiance through regular reviews
and refinements of processes and
work environment thereby ensuring
its dynamism and robustness and
keeping the spirit of its key guiding
principles and policies.
During the year 2009, training &
development team of the Bank
continued its pursuit for quality
training to the Bank’s staff in line
with the approved training policy.
Training goals were determined in
light of the well defined training need
assessments (TNA) procedures as
envisaged in the overall strategic
plan of the Bank. During the year,
another training academy was
established in Karachi, adding to
the two training academies already
operating in Rawalpindi and Lahore.
These academies conducted a record
number of 456 courses, workshops
and skill development clinics in the
disciplines of service & attitude,
management & communication,
IT, credit & finance, international
trade, domestic banking operations,
risk management, and on other
diverse subjects including series of
leadership development programs
for senior management of the Bank.
These courses were conducted by
professionally skilled qualified faculty
aided by industry experts.
During the year 2009 the first phase
of new Human Capital Management
System (HCM) i.e. PeopleSoft HCM
was implemented that integrates
HR systems and processes and
provides expanded online services
for staff on HR matters. The
advance modules of the system will
automate many processes relating
to selection and recruitment, training
and development, performance
management, career and succession
planning etc.
During the period under review most
of the task relating to organizational
restructuring have been completed,
which included development &
implementation of performance
management system (PMS),
finalization of the organogram of the
Bank and each business / operating
unit, development of job description
documents etc.
For the first time during 2009, the
PMS based on well-defined goals and
responsibilities was made effective
with the new performance appraisal
system during the annual employee
appraisal exercise.
page | 43
Financial Review
2006
2007
Taxation
2004
2009
2008
2005
2007
11%
8%
8%
8%
5,916
8%
11%
2008
2009
Non-interest income
1,845
2004
2005
3,283
2,555
28%
2,594
4,802
7,743
35%
2,707
4,565
2006
Net interest income
Dividends
6,458
5,620
38%
2,139
4,503
3,370
1,633
75
2005
Retained Profit
(628)
(381)
2004
34%
1,552
1,108
1,071
48%
534
1,015
1,178
1,047
1,097
1,203
1,299
837
723
920
502
71%
7,030
(Rs. in million)
9,033
Operating Expenses
(Rs. in million)
1,503
Non-Interest Income
(Rs. in million)
1.421
Distribution of Profits
2006
Operating expenses
Non-interest Income to net interest income
2007
2008
2009
Cost to Income Ratio (CIR)
Non mark-up / non interest income
Operating Expenses
The operating profit (i.e. profit before
provisions and taxation) of the Bank stood
at Rs.4.56 billion; almost at the same level
as of last year (2008: Rs.4.53 billion). Pretax profit recorded growth of 256%, whereas
profit after tax registered an increase
of 187% compared to the corresponding
year. The net interest income registered
an increase of 17%, despite revenue
suspensions owing to burgeoning NPLs.
Non-interest income decreased by 6% while
administrative expenses increased by 19%.
The non mark-up / non interest income,
declined by 6%, mainly due to (a) a one-off
income recognized last year from dealing in
foreign currencies and (b) overall subdued
economic activity during the period under
review. The fee, commission and brokerage
income recorded marginal increase, 4%
over last year. Gain on sale of investments
registered increase owing to improvement
in bourses.
Administrative expenses have increased
by 19% over the previous year. This rise is
mainly due to 26 new branches opened
during 2009, as well as 36 new branches
opened in late 2008, beside persistent
inflationary upsurge. Cost to income
ratio recorded a negative trend, reflecting
combined effect of disproportionate decline
in revenues and rise in operating costs.
Shareholders’ Funds
Earnings per Share
Return on Average Assets
(Rs. in billion)
(Rupees)
254.3
Profits
8.9
206.2
182.2
166.0
145.1
23%
107.2
11.2
13.4
14.9
15.3
12.3
11.1
23%
1.6%
1.5%
1.4%
6.0
8.8
28%
13.0
2.0%
35%
0.5%
2.2
8%
2004
2005
Shareholders’ funds
2006
2007
2008
0.2%
1.0
3%
2009
2004
2005
2006
2007
2008
2009
Return on Average Shareholders’ fund
2004
2005
2006
2007
Total Assets (Rupees in billion)
2008
2009
Return on Average Assets (RoA)
Earnings per share
Return on average assets
Shareholders’ funds increased to Rs.14.95
billion at the end of December 31,
2009 from Rs.12.97 billion of last year,
registering an increase of 15%. Net surplus
on revaluation of assets including equities,
increased by 93% due to improvements in
bourses.
Earnings per share (EPS) increased from
Re.0.76 per share (restated for bonus
shares issued during 2009) of last year
to Rs.2.18 per share for the year 2009.
The increase is mainly due to growth of
17% in net interest income and decline in
provisions / write-offs by 28%; partly offset
by increase of 19% in operating expenses.
Return on average assets at the close of
2009 was 0.48% as against 0.20% last year,
registering an increase of 28 bps due to
187% increase in profit for the year against
increase in total assets of 23%.
page | 44
(Rs. in billion)
Capital Adequacy
254.3
Analysis of Deposits
(Rs. in billion)
2006
2007
2008
2004
Current
Saving
2006
Time
2008
182.2
206.2
9.2%
107.2
47.7
9.4%
11.8%
2.1
44.4
39.7
43.3
2007
2.3
30.0
2.1
28.6
40.4
1.7
24.0
2005
145.1
82
82
66
59
2009
NPL as % of Gross Advances
1.2
1.3
2005
Gross Advances
20.4
18.5
38.0
50
72
4%
2%
2004
8.5%
10.9%
166.0
148
8%
6%
3%
11.0%
12%
13.3
108
88
103
140
112
Non-Performing Advances
2009
Others
2004
2005
2006
Total Assets (Rs. in billion)
2007
2008
2009
Capital Adequacy Ratio (Percent)
NPLs and provisions against NPLs
Current, Savings and other deposits
Capital adequacy
Non-performing loans (NPLs) increased
by 52% during 2009, due to new
classifications. Cumulative provision
against NPLs increased by 14%, whereas
provision charge for the year declined
by 43% due to recognizing Rs.2.81 billion
as the benefit of forced sale values
(FSV), as allowed by the SBP. By year
end 2009, NPLs as a percentage of total
advances reached 12.01% compared to
8.36% at the end of 2008. The aggregate
provisions covered 71% of the NPLs,
compared to 94% last year – mainly due
to the recognition of the aforesaid FSV
benefit.
At the close of 2009, customer deposits
had reached Rs.205.97 billion from
Rs.167.68 billion at end 2008, an increase
of 23% during the year. Both the local and
foreign currency deposits grew almost
at the same rate i.e. 23% - local currency
deposits increased to Rs.174.28 billion
from Rs.141.89 billion as of December 31,
2008, while the foreign currency deposits
stood at Rs.31.69 billion as on December
31, 2009. The aggregate number of deposit
accounts reached 692,821 at end 2009 – an
increase of 13% over last year.
As of December 31, 2009, Bank’s capital
adequacy ratio (CAR) stood at a comfortable
11.75% (9.22% at end 2008), against the
SBP’s minimum requirement of 10%. The
improvement in CAR is the result of certain
measures initiated by the Bank during
2009, which include issue of Tier II capital
i.e., an unsecured subordinated loan in the
form of Term Finance Certificates (TFC-III)
amounting to Rs.3 billion, aggressive risk
profiling of assets and, increased emphasis
on risk adjusted returns by all risk taking
units.
page | 45
Financial Calendar
2009
1st Quarter Results issued on April 28, 2009
2nd Quarter Results issued on August 20, 2009
3rd Quarter Results issued on October 27, 2009
18th Annual Report issued on February 23, 2010
18th Annual General Meeting scheduled forMarch 30, 2010
20% bonus shares to be issued Within 45 day of AGM
2008
1st Quarter Results issued on April 28, 2008
2nd Quarter Results issued on August 28, 2008
3rd Quarter Results issued on October 23, 2008
17th Annual Report issued on February 21, 2009
17th Annual General Meeting scheduled forMarch 30, 2009
25% bonus shares issuedWithin 45 day of AGM
Summarized Quarterly Financial Results
Rupees in million
1st Qtr
2009
2nd Qtr
3rd Qtr
4th Qtr
1st Qtr
2008
2nd Qtr
3rd Qtr
4th Qtr
Financial Position
Assets
Cash, short term funds & statutory deposits with SBP
Investments
Advances
Operating fixed assets
Other assets
33,031 34,363 38,251 32,364 33,815 39,620 58,332 67,046 120,218 129,130 124,959 135,034
8,323 9,493 9,675 9,846
9,185 9,573 9,575 10,036
23,980 26,258 27,027 24,464
39,788 40,775 36,691 35,678
102,111 114,036 124,630 128,818
5,498 5,886 6,360 8,266
6,140 7,257 8,216 8,965
Total assets
Liabilities
Borrowings from financial institutions
Customers deposits
Sub-ordinated loans
Other liabilities
204,572 222,179 240,792 254,326 177,517 194,212 202,924 206,191
23,289 16,735 19,965 19,300 157,324 180,658 191,449 205,970 2,996 2,996 5,370 5,995 7,342 7,685 9,137 8,113 21,368 19,715 19,856 15,190
134,867 153,324 161,108 167,677
2,997 2,997 2,996 2,996
6,325 6,440 7,667 7,357
Total liabilities
Share capital
Reserves and unappropriated profit
Surplus / (deficit) on revaluation of assets 190,951 208,074 225,921 239,378
165,557 182,476 191,627 193,220
Total shareholders’ funds
5,073 7,279 1,269 5,073 7,547 1,485 13,621 14,105 5,073 8,138 1,660 5,073
8,069
1,806
4,059 7,772 129 4,059 7,999 (322)
4,059 8,017 (779)
4,059
7,976
936
14,871 14,948
11,960 11,736 11,297 12,971
Profit & Loss
Total income
Mark-up / return / interest earned
Mark-up / return / interest expensed
6,140 5,563 3,167 5,989 5,416 3,073 6,252 5,483 3,479 6,835 6,199 3,910 4,566 3,988 2,164 4,790 3,904 2,324 5,767 4,983 2,994 5,978
5,519
3,169
Net mark-up / interest income
Non - mark-up / interest income
Fee, commission and exchange income
Other income
Operating expenses
Provisions against non-performing assets
2,396 577 375 202 1,676 791 2,343 573 332 241 1,682 860 2,004 769 285 484 1,809 70 2,289
636 315
321 1,863 1,194
1,824 578 422 156 1,328 826 1,580 886 754 132 1,381 822 1,989 784 616 168 1,605 1,154 2,350
459
339
120
1,601
1,271
Operating profit
1,297 1,234 964 1,062
1,074 1,085 1,168 1,208
Profit before tax
Taxation
506 (190) 374 (106) 894 (302) (132) 63
248 (66) 263 (36) 14 (4)
(63)
23
Profit after taxation
Ratios (percent)
Return on average shareholders’ funds (RoE)
Return on average assets (RoA)
316 268 592 (69)
182 227 18 (40)
9.5%
0.6%
7.7%
0.5%
16.3%
1.0%
-1.9% -0.1% 6.0%
0.4%
7.7%
0.5%
0.6%
0.0%
-1.3%
-0.1%
page | 46
Share & Debt Information
1.
Share information
1.1
The ordinary shares of Askari Bank Limited are listed on the Karachi, Lahore and Islamabad stock exchanges. The audited financial statements have been
submitted to the stock exchanges within the requisite notice periods as required by the relevant regulations. Askari Bank’s Central Depository System ID
is 05132.
1.2
Market symbols
Karachi Stock Exchange – AKBL, Reuters – ASKB.KA, Bloomberg – AKBL: PA
1.3
Share price and volume
Askari’s
Number of Shares
Askari’s
Shareholders’
funds
103,553,663 108,731,400 114,168,000 125,584,800 150,701,684 200,433,239 300,649,859 405,877,308 507,346,700 Askari’s
Market
capitalization
2.58 4.17 5.05 6.02 8.81 11.05 12.27 12.97 14.95 1.38 2.92 5.88 11.80 25.41 21.04 29.99 5.91 13.85 KSE’s
market
capitalization
Askari’s
share in market
capitalization
297.42 595.21 951.45 1,723.45 2,746.56 2,771.11 4,329.91 1,857.18 2,753.54 Askari
High
During the year
0.46%
0.49%
0.62%
0.68%
0.93%
0.76%
0.69%
0.32%
0.50%
Askari
Low
During the year
16.45 27.90 53.90 98.25 133.25 145.00 128.75 106.20 28.69 (Rupees)
Askari
Close
at December 31
10.35 13.50 21.30 50.61 70.00 68.00 75.50 14.57 12.15 Askari’s number of
shares traded
during the year
2001
2002
2003
2004
2005
2006
2007
2008
2009
13.30 26.85 51.50 94.00 126.80 104.95 99.75 14.57 27.30 51,396,000
36,984,000
96,059,000
1,043,563,300
612,803,600
444,476,500
1,628,929,400
382,990,000
190,782,242
1.4
Record of share issues
Year
Issue
Number of shares Share capital (Rs)
1992
1993
1995
1996
1996
1997
1998
2001
2002
2003
2004
2005
2006
2007
2008
2009
Prior to public issue Public issue 50% Rights issue @ Rs.10 per share Bonus @ 15% 50% Rights issue @ Rs.20 per share Bonus @ 10% Bonus @ 15% Bonus @ 5% Bonus @ 5% Bonus @ 5% Bonus @ 5% Bonus @ 10% Bonus @ 20% Bonus @ 33% Bonus @ 50% Bonus @ 35% Bonus @ 25% 15,000,000 15,000,000 15,000,000 6,750,000 22,500,000 7,425,000 12,251,250 4,696,312 4,931,101 5,177,712 5,436,568 11,416,794 25,116,947 49,731,555 100,216,620 105,227,450 101,469,326 150,000,000
150,000,000
150,000,000
67,500,000
225,000,000
74,250,000
122,512,500
46,963,120
49,311,010
51,777,120
54,365,680
114,167,940
251,169,474
497,315,549
1,002,166,196
1,052,274,496
1,014,693,261
507,346,635 5,073,466,346
2.
Debts Information
2.1
“Askari Bank has issued the following Term Finance Certificates (TFCs) - unsecured sub-ordinated debt, listed on the Lahore Stock Exchange (LSE). “
(Rupees in million) TFC - I
IPO investors General Public Underwriters 1,000 500 - Market Symbols / IDs at LSE Rating by PACRA
Market Price as at December 31, 2009 (based on marketable lots of Rs. 5,000)
Applicable Interest Rate (p.a.) as at December 31, 2009
Price Volume Chart
TFC - III
1,125 226 149 2,375
19
606
1,500 1,500 3,000
AKBLTFC
AA–
5,000
13.50%
AKBLTFC2
AA–
5,000
14.35%
AKBLTFC3
AA–
5,000
15.25%
Quarterly Price Volume Chart
(During the year 2009)
(During the year 2004 to 2009)
No. of shares
in ‘000
Rupees
per share
4,000
30
3,500
25
3,000
Rupees
160
140
120
20
2,500
2,000
15
1,500
10
1,000
100
80
60
40
5
500
0
TFC - II
Jan
Volume
Feb
Mar
Apr
May
Average share price
Jun
Jul
Aug
Sep
Oct
Nov
Dec
0
20
0
Q1
Q2
Q3
Volume
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Average share price
page | 47
Horizontal & Vertical Analysis
FINANCIAL POSITION
Horizontal Analysis
2009
2008
Vs
Vs
2009
2008
2007
2008
2007
Rupees in millions
Variance
Assets
Cash and balances with treasury banks
19,386 16,030 13,356 21%
20%
Balances with other banks
8,364 3,955 3,497 111%
13%
Lendings to financial institutions
4,614 4,480 14,444 3%
-69%
Investments
67,046 35,678 39,431 88%
-10%
Advances
135,034 128,818 100,780 5%
28%
9,846 8,266 5,128 19%
61%
Other assets
10,036 8,964 5,535 12%
62%
254,327 206,191 182,172 23%
13%
Liabilities
Bills payable
2,946 2,585 2,627 14%
-2%
Borrowings
19,300 15,190 17,554 27%
-13%
Deposits and other accounts
205,970 167,677 143,037 23%
17%
Sub–ordinated loans
5,995 2,996 2,997 100%
–
Deferred tax liabilities
334 13 472 2469%
-97%
Other liabilities
4,833 4,759 3,220 2%
48%
239,378 193,220 169,906 24%
14%
Net assets
14,949 12,971 12,266 15%
6%
Represented by
Share capital
Reserves
Unappropriated profit
Surplus on revaluation of assets – net of tax
5,073 7,183 886 13,143 1,806 14,949 4,059 7,667 309 12,035 936 12,971 3,006 6,948 2,145 12,100 166 12,266 25%
-6%
187%
9%
93%
15%
35%
10%
-86%
-1%
463%
6%
PROFIT & LOSS ACCOUNT
Horizontal Analysis
2009
2008
Vs
Vs
2009
2008
2007
2008
2007
Rupees in millions
Variance
Mark–up / return / interest earned
22,662 Mark–up / return / interest expensed
13,629
Net mark–up / interest income
9,033 Provision against non–performing
loans and advances
2,324 Impairment loss on AFS investments
431
Provision for impairment in the
value of investments / Rev repo
77 Bad debts written off directly
–
2,915 Net mark–up / interest income
after provisions
6,118 Non mark–up/interest income
Fee, commission and brokerage income
1,308 Dividend income
163 Income from dealing in foreign currencies
538 Gain on sale of investments – net
144 Unrealised gain on revaluation of investments classified as held for trading – net (2)
Other income
404 Total non–markup / interest income
2,555 8,672 Non mark–up/interest expenses
Administrative expenses
6,996 Other charges
34 Total non–markup / interest expenses
7,030 Profit before taxation
1,642 Taxation – current
562 – prior years’
120 – deferred
(147)
534 Profit after taxation
1,108 Basic / diluted earnings per share – Rupees
2.18 page | 48
2007
Vs
2006
Vertical Analysis
2009
2008
2007
Rupees in millions
2009
-10%
-52%
72%
38%
2%
35%
45%
10%
19,386 16,030 13,356 8,364 3,955 3,497 4,614 4,480 14,444 67,046 35,678 39,431 135,034 128,818 100,780 9,846 8,266 5,128 10,036 8,964 5,535 254,327 206,191 182,172 8%
3%
2%
26%
53%
4%
4%
100%
8%
2%
2%
17%
63%
4%
4%
100%
7%
2%
8%
22%
55%
3%
3%
100%
43%
17%
8%
–
-36%
24%
10%
11%
2,946 2,585 2,627 19,300 15,190 17,554 205,970 167,677 143,037 5,995 2,996 2,997 334 13 472 4,833 4,759 3,220 239,378 193,220 169,906 14,949 12,971 12,266 1%
8%
86%
3%
–
2%
100%
6%
1%
8%
87%
2%
–
2%
100%
7%
2%
10%
84%
2%
–
2%
100%
7%
34%
48%
6%
88%
12%
100%
32%
59%
2%
93%
7%
100%
25%
57%
17%
99%
1%
100%
50%
19%
19%
26%
-88%
11%
5,073 7,183 886 13,143 1,806 14,949 4,059 7,667 309 12,035 936 12,971 3,006 6,948 2,145 12,100 166 12,266 2008
Composition
2007
Vertical Analysis
2007
Vs
2006
2009
2008
2007
Rupees in millions
2009
2008
Distribution
2007
18,393 10,651 7,743 15,143 8,686 6,458 23%
28%
17%
21%
23%
20%
20%
24%
15%
22,662 13,629 9,033 18,393 10,651 7,743 15,143 8,686 6,458 100%
60%
40%
100%
58%
42%
100%
57%
43%
3,825 –
3,920 –
-39%
100%
-2%
–
248%
–
2,324 431
3,825 –
3,920 –
10%
2%
21%
–
26%
–
1
247 4,073 2
–
3,922 7600%
-100%
-28%
-50%
100% 4%
–
–
247%
77 –
2,915 1
247 4,073 2
–
3,922 – –
13%
– 1% 22%
–
–
26%
3,670 2,536 67%
45%
-44%
6,118 3,670 2,536 27%
20%
17%
1,258 174 874 37 1,073 137 656 2,361 4%
-6%
-38%
289%
17%
27%
33%
-98%
6%
26%
12%
2008%
1,308 163 538 144 1,258 174 874 37 1,073 137 656 2,361 5.8%
0.7%
2.4%
0.6%
6.8%
0.9%
4.7%
–
7.1%
0.9%
4.3%
15.6%
22 343 2,707 6,377 2
337 4,565 7,101 -109%
18%
-6%
36%
1000%
2%
-41%
-10%
200%
5%
113%
7%
(2)
404 2,555 8,672 22 343 2,707 6,377 2
337 4,565 7,101 –
1.8%
11%
38%
0.1%
1.9%
15%
35%
–
2.2%
30%
47%
5,904 11 5,916 461 17 (50)
108 75 386 0.76 4,790 12 4,802 2,300 99 (234)
(246)
(381)
2,681 6.61 18%
209%
19%
256%
3206%
-340%
-237%
612%
187%
187%
23%
-9%
23%
-80%
-82%
-79%
-144%
-120%
-86%
-89%
46%
100%
46%
-31%
-90%
-100%
-318%
-135%
19%
19%
6,996 34 7,030 1,642 562 120 (147)
534 1,108 5,904 11 5,916 461 17 (50)
108 75 386 4,790 12 4,802 2,300 99 (234)
(246)
(381)
2,681 31%
0.2%
31%
7%
2.5%
0.5%
-0.7%
2.0%
4.9%
32%
0.1%
32%
3%
–
–
1%
0%
2%
32%
0.1%
32%
15%
1%
-2%
-2%
-3%
18%
Balance Sheet Horizontal Analysis
Cumulative average growth rate for the last three year - annualised
8%
Surplus on revaluation of assets - net of tax
- 21%
7%
Reserves
36%
Share capital
11%
Net assets
23%
Other liabilities
-23%
0%
Liabilities against assets subject to finance lease
26%
Sub-ordinated loans
16%
9%
Borrowings
17%
Bills payable
15%
Total assets
38%
Other assets
0%
Deferred tax assets
37%
11%
Advances
33%
Investments
-18%
4%
9%
Balance Sheet Vertical Analysis
Composition for the last three year
100%
100%
90%
90%
80%
80%
70%
70%
60%
60%
50%
50%
40%
40%
30%
30%
20%
20%
10%
10%
0
2009
2008
2007
Other assets
Advances
Investments
2009
2008
2007
0
Reserves
Share capital
Other liabilities
Sub-ordinated loans
Borrowings
Bills payable
page | 49
December 31 Assets Advances - net
Investments Cash, short term funds and statutory deposits with SBP Operating fixed assets Other assets Total assets Non-performing loans
Provisions for non-performing loans
Liabilities Deposits Refinance borrowings Sub-ordinated loans Other liabilities Shareholders’ funds Total shareholders’ funds Share capital Reserves Surplus on revaluation of assets Profitability Interest income Interest expenditure Net interest income
Provision against non-performing assets Fee, commission and exchange income Other income Operating expenses Profit before taxation Taxation Profit after taxation Operating profit Total income Total expenditure
Cash flows
Operating activities
Investing activities
Financing activities
Changes in cash & cash equivalents
Cash & cash equivalents at end of the year
Business transacted Imports Exports Guarantees Ratios Return on average shareholders’ funds (RoE)
Return on average assets (RoA)
Profit before tax ratio
Gross spread ratio
Income / Expense ratio
Advance to deposits (CDR)
Earning assets to total assets
Operating fixed assets to average shareholders’ funds
Capital adequacy ratio (CAR) Rate of cash dividends
Rate of bonus issue
Price earning ratio (PE)
Dividend yield ratio - %
Dividend payout ratio - %
Share information Earnings per share (EPS)** Net assets per share Market value per share - year end
Market value per share - high
Market value per share - low
Other information Number of employees (Regular) Number of branches * post balance sheet event
** based on number of shares outstanding at each year end
page | 50
2000 2001 2002 2003 2004 2005 2006 2007
17,893 23,292 30,035 44,778 69,838 85,977 99,179 100,780 8,651 11,706 26,737 22,104 17,239 25,708 28,626 39,431 10,056 13,436 10,061 15,099 15,936 27,489 30,605 31,297 641 723 1,663 1,980 2,595 3,193 3,810 5,128 1,213 1,824 1,817 1,426 1,560 2,733 3,813 5,535 38,454 50,980 70,313 85,387 107,168 145,100 166,034 182,172 1,085 1,162 1,246 1,278 1,101 2,373 3,656 6,908 672 949 1,306 1,564 1,780 2,419 3,546 7,409 2008
2009
Rupees in million
128,818 135,034
35,678 67,046
24,464 32,364
8,266 9,846
8,965 10,036
206,191 254,327
11,689 17,725
11,013 12,594
30,360 41,200 51,732 61,657 83,319 118,795 131,839 143,037 167,677 2,882 3,222 3,392 7,329 9,777 9,778 13,378 9,918 13,902 - - - - 1,000 3,000 2,999 2,997 2,996 3,058 3,980 11,016 11,354 7,055 4,714 6,764 13,954 8,645 205,970
13,700
5,995
13,713
2,155 2,579 4,173 5,047 6,016 8,813 11,053 12,266 12,971 986 1,036 1,087 1,142 1,256 1,507 2,004 3,006 4,059 1,229 1,521 1,940 2,760 4,317 6,088 7,615 9,093 7,976 (60)
22 1,146 1,145 443 1,218 1,434 166 936 14,949
5,073
8,069
1,807
3,213 2,274 939 134 506 122 680 752 436 316 886 3,840 3,088 4,251 2,902 1,349 283 677 119 854 1,008 458 551 1,291 5,047 4,039 4,858 3,017 1,841 351 599 247 1,093 1,244 557 687 1,595 5,704 4,461 4,074 1,380 2,694 308 638 317 1,438 1,902 799 1,103 2,210 5,028 3,126 4,487 8,781 12,597 15,143 18,394 1,117 4,278 6,977 8,686 10,651 3,370 4,503 5,620 6,458 7,743 315 602 1,129 3,922 4,073 708 839 1,014 1,073 1,258 925 713 1,125 3,493 1,449 1,845 2,594 3,283 4,802 5,916 2,843 2,859 3,347 2,300 461 920 837 1,097 (381)
75 1,923 2,022 2,250 2,681 386 3,158 3,461 4,476 6,222 4,534 6,121 10,333 14,736 19,709 21,100 3,277 7,474 11,389 17,409 20,640 22,662
13,629
9,033
2,915
1,308
1,247
7,030
1,642
534
1,108
4,557
25,216
23,574
1,786 6,570 9,772 (675)
(452)
12,269 8,356 8,370 2,597 (213)
(3,122)
(13,965)
3,810 3,036 (8,319)
(3,715)
(13,527)
155 (261)
(145)
(235)
(253)
749 1,736 (226)
(203)
(446)
1,311 3,302 (4,428)
2,882 3,333 5,686 4,415 (5,359)
2,306 8,522 11,824 7,396 10,278 13,611 19,297 23,712 18,353 20,659 36,409
(32,216)
2,998
7,191
27,850
26.20 32.00 40.20 48.70 75.20 98.30 119.30 119.27 30.60 38.80 47.30 56.80 70.10 92.00 97.30 82.98 4.80 6.20 14.20 14.40 25.30 30.60 37.30 44.31 Rupees in billion
148.24 140.16
99.70 105.41
55.77 58.55
15.00 23.20 20.30 23.90 34.80 27.70 22.60 22.99 3.06 0.90 1.20 1.10 1.40 2.00 1.60 1.40 1.54 0.20 23.40 23.71 25.61 46.69 63.36 32.56 26.57 15.19 2.51 29.23 31.73 37.90 66.13 75.11 51.28 44.61 42.64 42.10 1.24 1.25 1.28 1.61 1.87 1.38 1.29 1.13 1.02 58.90 56.50 58.10 72.60 83.90 72.40 75.23 70.46 76.83 92.16 88.83 89.07 90.18 90.05 89.33 87.62 86.91 85.14 30.50 30.50 49.30 43.00 46.90 43.70 38.36 43.98 65.51 11.90 10.70 12.00 9.90 8.50 11.00 10.90 9.35 9.22 15.00 20.00 20.00 20.00 20.00 15.00 10.00 15.00 - 5.00 5.00 5.00 10.00 20.00 33.00 50.00 35.00 25.00 4.70 2.50 4.50 5.30 6.10 9.60 9.30 11.19 15.32 10.66 15.09 7.45 3.88 2.13 1.18 0.95 1.50 - 50.00 37.74 31.65 20.70 13.06 11.18 13.37 16.82 - %
7.94
0.48
7.25
39.86
1.07
65.56
85.71
70.53
11.75
20.00
12.50
-
3.00 5.30 6.32 9.66 15.31 13.42 7.48 8.92 0.95 21.86 24.89 38.39 44.19 47.90 58.48 55.15 40.80 31.96 14.07 13.25 26.85 51.50 94.00 126.80 104.95 99.75 14.57 23.50 15.85 27.25 53.00 97.35 131.90 142.70 127.25 104.25 12.45 10.65 13.75 21.60 50.50 71.15 71.45 77.10 14.57 Rupees
2.18
29.47
27.30
28.69
12.15
1,147 1,281 1,456 1,723 2,118 2,754 3,241 3,834 4,252 29 36 46 58 75 99 122 150 200 Numbers
4,393
226
page | 51
*
*
Directors’ Report
greater stability and positive trends in
macroeconomic indicators other than
inflation. Despite the adverse impact
of the multifarious and multifaceted
challenges on the economy, our
economic growth has not been out of
sync when viewed in a global context.
The latest signs indicate a further
upward trend.
On behalf of the Board of Directors,
I am pleased to present the 18th
Annual Report of Askari Bank Limited
along with the audited financial
statements and Auditors’ Report
thereon, for the year ended December
31, 2009.
The Economy
Pakistan’s economy faced
unprecedented challenges during
fiscal 2009 including a) severe
macroeconomic crises that resulted
from policy-induced imbalances
of the previous years; b) a sharp
deterioration in Pakistan’s net
external terms of trade as a result
of the spike in recent years in
world commodity prices of which
Pakistan is a net importer and its
adverse impact on our balance of
payments; c) the significant supply
shocks suffered by the economy in
the provision of energy due to high
oil prices and sector management
problems, especially circular debt
management; d) adverse effect
of the turmoil in global financial
markets that caused the sharp
decline in the global demand for
page | 52
exports; v) reduced availability of
expected external capital to finance
fiscal and current account deficit;
and f) the intensification of an
unprecedented domestic security
challenge which has exacted a high
cost from the economy, both in terms
of direct costs, as well as in terms
of a significant knock-on effect on
investment inflows and market
confidence.
In this backdrop, during fiscal 2009,
GDP grew by 2.0 percent compared
to the revised rate of 4.1 percent in
the previous year. In response to
the challenges outlined above, the
government strongly committed
itself to restoring macroeconomic
stability as well as the confidence of
markets and investors. This occurred
mostly with the build-up of foreign
exchange reserves upon our entry
in the International Monetary Fund
(IMF) program, and the shielding of
the confidence in Pakistan’s banking
system and financial markets
from the devastating effects of the
international financial crises due to
a strong regulatory regime. Towards
the end of 2009 this was backed by
The fiscal deficit remained behind the
annual target owing to a continuing
rise in expenditure and delays in
certain revenue receipts. Despite
sharp increase in the fiscal deficit,
financing from domestic sources
grew moderately, partly because
the Government reduced its reliance
on inflationary borrowing from
the State Bank of Pakistan (SBP).
A major success in fiscal policy is
the recent agreement between the
federal and provincial governments
on the Seventh National Finance
Commission (NFC) Award.
On the external front, Pakistan’s
external accounts improved
significantly due to a marked
contraction in the current account
deficit and an increase in the capital
account surplus. The major impetus
came from a contraction in the trade
account deficit, but the services
and income account deficits also
contracted significantly, reflecting
lower economic activity. Current
transfers were particularly robust
due to a substantial rise in workers’
remittances and other transfers. The
capital surplus was driven primarily
by increased inflows from the
International Financial Institutions
(IFIs). Net portfolio investment
returned to a positive, although
net foreign investment contracted.
Foreign Direct Investment (FDI),
on the other hand declined by 52.3
percent during fiscal 2009.
As a result of the improvement
in the overall external account,
Recent estimates suggest that GDP
growth is likely to be around the
annual target of 3.3 percent, a little
higher than the 2 percent seen in
fiscal 2009. The major contribution
for this growth is expected to come
from the services sector. Similarly,
the current account deficit is likely
to improve further in the current
fiscal relative to the previous year,
though some expected revival in
Deposits
CAGR 18.9%
143
168
119
83
70
132
101
129
99
2007
86
2006
(Rs. in billion)
135
CAGR 14.1%
206
(Rs. in billion)
2004
2005
2009
2008
Profit before tax
2004
2005
2006
2007
2009
2008
Total Assets
(Rs. in million)
(Rs. in billion)
CAGR 18.9%
254
CAGR 10.4%
145
182
107
146
1,642
166
2005
2,300
2004
206
3,347
2,859
The net private sector credit growth
remained subdued and the riskaverse behavior of banks allowed the
government to finance its spending
from the banking system. It was
primarily the combination of tight
liquidity and risks of a re-emergence
of inflationary pressures that led to
a measured and gradual easing of
monetary policy. SBP reduced the
policy rate by 150 bps in two rounds,
resulting in a cumulative reduction
of 250 bps in the policy rate since
the beginning of current easing
cycle that started in April 2009.
These measures were supported by
substantial moderation in demand
pressures. The scale and speed
of the decline in inflation suggest
that the tight monetary policy and
sharply constrained monetization of
the fiscal deficit have eased excess
demand pressures that had adversely
impacted the economy in the previous
years.
Advances
2,843
Pakistan was able to rebuild its
foreign exchange reserves, which
crossed the US dollar 15 billion mark
by end 2009. Pakistan’s trade deficit
declined significantly mainly due to
23 percent year on year fall in the
import bill although exports continued
to decline. The contraction in imports
was a result of restrained demand,
better domestic production of some
commodities i.e. wheat and cotton,
and a fall in international commodity
prices.
2006
2007
2008
import demand from manufacturing,
and rising commodity prices, may
possibly contain the improvement
going forward. While average
Consumer Price Index (CPI) inflation
is projected to decelerate, it is likely
to remain higher than the annual
target. The Government is faced with
considerable pressure to increase
social sector spending and build
infrastructure, even as the cost of the
anti-militancy campaign continues
to mount, and, at the same time, the
weak economy constrains its ability
to raise revenues from an unchanged
tax base. A major challenge in the
economy is to improve the tax-toGDP ratio. These challenges suggest
the need to work urgently towards
broadening the tax base to provide
needed essential services and public
goods.
2009
2004
2005
2006
2007
2008
Operating Results
of the Bank
Askari Bank’s operating profit (before
provisions / impairment against nonperforming assets, and taxation) for
2009 stood at Rs. 4.56 billion; almost
at the same level as last year (2008:
Rs. 4.53 billion), notwithstanding
the increase of 28 percent in markup expenses. This sustainability is
attributable mainly to an offsetting
increase of 23 percent in gross markup income – which came despite
increase in revenue suspension on
burgeoning non-performing loans
(NPLs): Non-fund income decreased
by 6 percent. The profit before
tax for the year 2009 increased to
Rs.1,642 million from Rs.461 million
of corresponding period the previous
year - an increase of 256 percent,
while the profit after tax registered a
growth of 187 percent during 2009.
page | 53
2009
Directors’ Report (cont.)
At the close of 2009, customer
deposits had reached Rs. 206 billion
from Rs. 168 billion at the end of
2008, an increase of 23 percent during
the year. Both local and foreign
currency deposits grew almost at
the same rate i.e. 23 percent - local
currency deposits increased to
Rs. 174 billion from Rs. 142 billion as
of December 31, 2008, while foreign
currency deposits stood at Rs. 32
billion as on December 31, 2009.
On the asset side, gross advances
increased rather slowly by 6 percent,
to Rs. 148 billion as of December 31,
2009 from Rs. 140 billion last year,
in line with slowdown in private
sector credit growth. Also the Bank
continued to exercise effective risk
management and remained watchful
of the impacts on capital adequacy.
The increase in advances backed by a
rise in yields, was the main reason for
an increase in mark-up based income
by 20 percent over 2008, despite
rising NPLs and corresponding profit
suspension representing around 14
percent of mark-up revenue from
advances. The aggregate investment
portfolio stood at Rs. 67 billion as on
December 31, 2009 against
Rs. 36 billion on December 31,
2008 – an increase of 88 percent.
This reflected the Bank’s focus
on risk profiling of assets and
correspondingly mark-up income on
investments recording an increase of
46 percent over 2008. The aggregate
increase of 23 percent in total mark
up income reduced to 17 percent
in terms of aggregate net interest
income, reflecting effects of greater
increase in mark-up expense
compared to mark up income.
During the year 2009, non-fund
income declined by 6 percent over
last year, mainly due to a decline
in income from dealing in foreign
currencies, and due to subdued
economic activities during the
period under review. Administrative
expenses increased by 19 percent
over the previous year owing to an
increase in branch network and the
resultant increase in staff, besides
overall increase due to inflation.
As of December 31, 2009, nonperforming loans & advances
(NPLs) stood at Rs. 17.73 billion
against Rs. 11.69 billion as of
December 31, 2008, an increase
of 52 percent due to mainly new
classifications. The highest categories
of classification encompass most
of the NPLs – 76 percent in ‘loss’
and 20 percent in ‘doubtful’. These
have been appropriately provided
for in compliance with relevant
Prudential Regulations (PR) of the
SBP. Consequent upon increase in
NPLs and their further downgrade,
the cumulative provision against
non-performing advances stood at
Rs. 12.59 billion, reflecting an increase
of 14 percent over 2008. However, the
provision charge / write-off for the
year declined by 43 percent compared
to the last year, largely due to the
benefit of forced sale values (FSV) in
terms of the SBP, BSD circulars No.
2 & 10 of 2009 which amounted to
Rs. 2.81 billion as disclosed in note
10.5.1 to the financial statements
(2008: note 10.4.1). The ratio of nonperforming advances as a percentage
of total advances increased to 12.01
percent as of December 31, 2009,
against the previous year’s 8.36
percent. The aggregate provisions
covered 71 percent of the NPLs as
against the coverage ratio of 94
percent in 2008 – the dilution in
coverage being due to the recognition
of the aforesaid FSV benefit as
allowed by the SBP.
Asset Mix - Earning
Liability Mix - cost bearing
Advances by segment
(Percent)
(Percent)
(Percent)
5.5
2.6
9.3
5.9
3.8
4.3
20.6
8.3
48.3
57.6
19.3
3.6
9.4
2.4
9.2
69.6
20.1
Advances
Federal government securities
Equity and debt instruments
Money market funds
page | 54
Saving deposits
Current accounts
Repo and other borrowings
Fixed deposits
Sub-ordinated loans
Refinance borrowing from SBP
Corporate sector
SMEs sector
Agricultural sector
Consumer sector (Other than staff loans)
Commodity financing
Staff loans
Earnings per share
The earnings per share for the year
ended December 31, 2009 was Rs.
2.18, against the previous year’s Re.
0.76, the ratio worked out after taking
into account the number of shares
issued during 2009. The improvement
is due primarily to reduction in
provision / write-off against NPLs
during the year 2009.
Appropriations
The Board of Directors recommends
the following appropriations from
profits for the year ended December
31, 2009:
Rupees in thousands
Un appropriated profit
for the year 2009
1,107,793
Appropriations:
Statutory reserve
General reserve
(221,559)
(886,234)
Transfer from general
reserve to reserve for
issue of bonus shares (1,107,793)
–
1,071,240
Reserves as at December 31, 2009
include Rs. 2.24 billion (2008: Rs. 446
million) of the benefit of 40 percent
(2008: 30 percent) of forced sale value
of pledged stocks and mortgaged
residential, commercial and industrial
properties (land & building only) –
(2008: benefit of industrial properties
not available) held as collateral
against non-performing advances
allowed under BSD Circular No. 10
of 2009 dated October 20, 2009 as
referred to in note 10.5.1 above.
Reserves to that extent are not
available for payment of cash or stock
dividend in terms of above referred
circular.
In terms of the SBP BSD Circular No. 4
dated February 13, 2009 as disclosed
in audited financial statements for
the year ended December 31, 2008,
note 9.14, the impairment loss
amounting to Rs. 441 million shown
under equity, had to be taken to profit
and loss on a quarterly basis, subject
to adjustment for or effect of price
movements. Accordingly, an amount
of Rs. 285 million was charged to
profit and loss account during 2009.
Additionally, continuing with the
impairment policy followed by the
Bank, an amount of Rs. 146 million
was recognized as impairment on the
investment portfolio.
The appropriation of capital reserve
(reserve for issue of bonus shares),
amounting to Rs. 1,071,240 thousand
will enable the Bank to meet the
enhanced Minimum paid-up Capital
Requirement (MCR) of Rs. 6 billion, as
required by the SBP BSD Circular No.
07 dated April 14, 2009.
Advances by sector
NPL by sector
Earnings per share
(Percent)
(Percent)
(Rupees)
3.2
0.9
6.7
10.8
9.6
19.1
0.9
4.7
30.1
0.8
3.8
0.3
15.3
14.8
20.0
22.1
Agri business
Cement & construction
Chemical & pharmaceutical
Food, beverages & tobacco
Fuel, energy & engineering
Individuals
Leather products & shoes
Miscellaneous
Textile
2.2
Miscellaneous
Synthetic & rayon
Textile
Transport
14.6
0.3
1.0
Agri business
Cement & construction
Chemical & pharmaceutical
Financial institutions
Food, beverages & tobacco
Fuel, energy & engineering
Individuals
Leather products & shoes
13.0
8.9
0.8
11.2
22.7
13.4
0.9
2004
2005
2006
2007
2008
2009
page | 55
Human Resource
Management
Human capital of the Bank is given
the highest value in the aim to
achieve our mission of being the
Bank of first choice. Accordingly, the
Bank’s focus remains on employee
development coupled with improving
the ambience through regular reviews
and refinements of processes and the
work environment, thereby ensuring
its dynamism and robustness and
keeping the spirit of its key guiding
principles and policies.
Technology
It has been stated in our earlier
communications that your Bank
is in the process of complete
transformation of technology
platform from existing systems
to the most modern and state of
the art system solutions, which
include core banking software Oracle
Financial Systems Solutions (OFSS)
(previously known as Flexcube) and
other peripheral systems i.e., Oracle
Financial, PeopleSoft, Reveleus, and
Siebel.
Your Bank realizes the importance of
the project as it is the most ambitious
activity, both in terms of cost and
commitment, the Bank has ever
undertaken. We are pleased to inform
you that the implementation of these
initiatives is at advanced stage –
some of them near completion. Two
branches are currently under parallel
run mode for core banking software,
and are expected to ‘go-live’ during
the first quarter of 2010. Rollout to
page | 56
all other branches is scheduled for
completion by end 2011. Similarly,
Oracle Financial, PeopleSoft, Siebel,
and Reveleus are under different
stages of implementation; these
softwares are also planned to
‘go-live’ during 2010. The benefits
that are expected from complete
implementation of these softwares
include an improvement in Bank’s
service and delivery alongwith
an improvement in the internal
control environment, minimization
of manual work and processes,
process efficiencies, and, above all,
and improvement in our products
and customer service standards.
Simultaneously, the Bank has also
initiated an exercise with the objective
of aligning new softwares’ capabilities
with business and operations for
optimal utilization of the core banking
software.
We wish to apprise you that most of
the tasks relating to organizational
restructuring have been completed,
including development and the
implementation of Performance
Management System (PMS),
finalization of the organogram of the
Bank as well as of each business /
operating unit, and development of
job description documents.
For the first time during 2009, a PMS
based on well-defined goals and
responsibilities was made effective
with the new performance appraisal
system during the annual employee
appraisal exercise.
During the year 2009, training &
development team of the Bank
continued its pursuit for quality
training to the Bank’s staff in line with
the approved policy. Training goals
were determined in light of the welldefined Training Need Assessments
(TNA) procedures as envisaged in
the overall strategic business plan of
the Bank. During the year, another
training arm i.e., our training academy
in Karachi was inaugurated, adding to
the two training academies already
operating in Rawaplindi and Lahore.
This enabled the Bank to conduct
a record number of 456 courses,
workshops and skill development
clinics in 2009 in the disciplines of
Risk Management
Framework
Your Bank fully recognizes that
the risk management function is
fundamental to the business of
banking and is an essential element
of our banking strategy. Since
the issuance of guidelines on risk
management and the subsequent
Institutional Risk Assessment
Framework (IRAF) questionnaire by
the State Bank of Pakistan (SBP), the
Bank has adopted a holistic approach
to risk management and has been
engaged in extensive and detailed
evaluation and assessment of its risk
management framework in all areas
of banking activity.
service & attitude, management and
communication, IT, credit & finance,
international trade, domestic banking
operations, risk management, and
on other diverse subjects including
a series of leadership development
programs for senior management
staff of the Bank. These courses
were conducted by qualified and
professionally skilled faculty and
industry experts.
During the year 2009 the first phase
of new Human Capital Management
System (HCM) i.e. PeopleSoft HCM
which integrates HR systems and
processes and provides expanded
online services for staff on HR
matters was implemented. The
advance modules of the system,
will automate many processes
relating to recruitment & selection,
training & development, performance
management, and career and
succession planning.
The Bank has in place a risk
management framework
encompassing risk policies and limits
structure, risk infrastructure, and
risk measurement methodologies
and tools. In 2009, we focused on
the implementation of policies
and strategies, and on creating an
awareness that every employee
is a risk manager at his workplace
thus invoking the importance of
his role in the overall risk structure
of the Bank. The Bank’s credit
initiation and approval process has
been strengthened by introducing
models to cover cash collateral and
SME exposure. Our internal credit
rating model now covers a wide
array of products spread across the
corporate, commercial, and SME
portfolio spectrum. Further, obligor
risk limits, risk pricing, and industrysector limits have been established
to mitigate concentration in any
particular segment. The scope of
market risk reporting has been
extended to include market risks in
the banking book as well as in the
trading book. The scope of the value
at risk (VaR) model is being enhanced
to include, inter alia, corporate debt
page | 57
in the trading book. The Bank has
developed new stress- testing
approaches and is aiming at their
systematic implementation. The
holistic approach to market risk the
Bank has adopted seeks to take into
account correlations of the Bank’s
performance with the money market
and the stock market in order to
generate unified risk metrics for the
trading book as a whole. The Bank
has developed and deployed tools and
techniques in measuring operational
risk such as risk and control self
assessment, loss data analysis, and
operational key risk indicators in
order to reduce operational losses,
improve performance measurement,
ensure better control of operations,
provide early warning of deteriorating
internal control, and enhance security
measures.
The Bank has also established a
comprehensive Operational Risk
Management framework based
on appropriate risk management
architecture. The framework assesses
and measures the operational risk
arising from our systems, people,
and processes. To minimize the
impact of unexpected, and potentially
catastrophic events on business
operations, the Bank has invested in
enhanced physical security and has
collaborated with a security agency to
improve protection of branches and
staff.
Information Security
Information assets are viewed
and valued as critical to the Bank’s
business continuity and its ability
to meet business objectives. During
the year 2007, an initiative for ISO27001 certification was undertaken
in close liaison with consultants
engaged for the purpose, and in order
to develop effective information
security management systems
page | 58
of the Bank in strict compliance
with the international standards
of confidentiality, integrity and
availability of its information
assets by adopting an integrated
approach to information security risk
management required for achieving
the international certification.
with foreign banks and their local
correspondent banks, enhance
banker–customer relationships
and build confidence amongst
stakeholders.
We are pleased to inform you that,
during 2009, the Bank achieved this
milestone and the British Standards
Institution (BSI), a leading global
provider of independent thirdparty certification of management
systems awarded your Bank ISO/ IEC
27001:2005 Certification, thus making
Askari Bank the first bank in Pakistan
to be awarded with this prestigious
certification. This certification will
further strengthen our relationships
Internal controls contribute to
effective management by both
the Bank’s Board of Directors and
management. While the Board
recognizes its responsibility as
envisaged in the relevant regulations,
the management of the Bank ensures
the establishment and maintenance
of adequate and effective systems
of internal control in compliance
with external laws and regulations
and consistent with the Bank’s own
internal policies. It is also responsible
to assess the effectiveness of internal
controls and report on them to the
Board.
Statement on Internal
Controls
The management ensures the
efficiency and effectiveness of the
internal control system by identifying
control objectives, devising and
reviewing appropriate policies and
procedures, and establishing relevant
control procedures. Significant policies
and procedural manuals are already
in place. Policies and procedures are
periodically reviewed and revised and
necessary amendments and updates
Our efforts aim
at improving
all aspects
of customer
experience a bit
better every day
page | 59
introduced. Preparation of new
policies and manuals is in progress.
The management is also cognizant of
its responsibility of putting a system
in place for the authentication of
transactions, strengthening of control
environment, and identifying areas
requiring improvement and devising
appropriate remedial action on a
timely basis. A complete revamp of
its existing IT platform is one of the
major moves in this direction. The
internal control system in the Bank
is designed to minimize the risk
of failure and to keep such failure
within tolerable limits as these
cannot be eliminated completely.
Only reasonable and not absolute
assurance can be provided against
material misstatement or loss.
The Bank is in the process of
adopting an internationally accepted
COSO Internal Control Integrated
Framework, as envisaged under the
SBP Internal Control Guidelines. The
Bank has devised a well-defined
and comprehensive internal control
program roadmap with specified
stages as suggested by the SBP. In
accordance with this program, the
Bank is in the advanced stages of
completing a detailed documentation
of the existing processes and controls,
together with a comprehensive
gap analysis of the control design.
The work under these two stages
is being reviewed by the Bank’s
external auditors under the SBP
internal control guidelines. Going
forward, the Bank intends to develop
detailed remediation plans to
address the gaps identified and to
ensure implementation of initiatives
to remove the gaps in a timely
manner. In addition, comprehensive
management testing plans and
framework are also planned to be
developed for ensuring on-going
operating effectiveness of key
controls.
page | 60
During the year 2009, the Bank
strived to ensure that an effective
and efficient internal control system
is implemented, that no material
compromise is made in implementing
the desired control procedures,
and, that a suitable environment is
maintained in general. However, the
process of identification, evaluation,
and management of significant risks
is an ongoing process, which the Bank
actively and vigilantly pursues.
Credit Rating
A bank’s credit rating reflects its
ability to protect its relative standing
in the sector by competing effectively
in the steadily increasing competitive
environment in the banking sector
and assumes its ability to take all
measures necessary for the purpose.
Askari Bank has been assigned the
long term rating of ‘AA’ and short
term rating of ‘A1+’ by the Pakistan
Credit Rating Agency (Pvt) Limited
(PACRA). The ratings reflect the
Bank’s strong capital structure
supported by sound profitability.
Taking note of the fast changing
banking dynamics, the management
has put in place a well-conceived
strategy to improve the Bank’s
performance and ensuring its strong
standing within the sector including,
as detailed earlier, and strengthening
its risk management framework.
According to PACRA “these ratings
reflect sustained ability of revenue
growth from core operations while
maintaining a low risk profile and
also dynamic as well as efficient fund
deployment strategy. Going forward,
given the strong technological
platform and enhanced geographical
outreach, the Bank is well positioned
to maintain its competitive edge
despite an increasingly competitive
operation environment.”
Entity Ratings
Long term
AA
Short term
A1+
by PACRA
Capital Adequacy
As of December 31, 2009, your Bank’s
capital adequacy ratio (CAR) stood
at a comfortable 11.75 percent
against 9.22 percent at the end of
2008, against the SBP’s minimum
requirement of 10 percent (2008: 9
percent). The improvement in CAR is
the result of the number of measures
taken by the Bank during 2009, which
include issue of Tier II capital i.e., an
un-secured subordinated loan in the
form of Term Finance Certificates
(TFC) -III amounting to Rs. 3 billion;
aggressive risk profiling of assets; and
increased awareness of the concept
of risk adjusted return amongst the
risk takers.
The ratio of our CAR at the current
enhanced level of 11.75 percent
provides sufficient room for further
improvement in risk assets necessary
for further growth of the Bank.
During the year 2009, the requirement
of raising the paid-up capital of the
Bank was eased by the SBP i.e., from
the previous requirement of Rs. 23
billion to Rs. 10 billion to be achieved
in phased manner by December 31,
2013 (an addition of Rs. 1 billion per
year). We are confident of meeting
the requirement comfortably.
The Board wishes to assure you that
we are fully cognizant of all related
developments, and that all measures
will continue to be taken to keep the
Bank’s position sound and in fact
acquiring further strength.
Branch Network
Your Bank is fully aware that
its branch network has direct
implications on the services that it
provides to its valued customers.
During the year, your bank opened
26 new branches including 11
Islamic banking branches, 4
conventional banking branches, and
11 sub-branches and converted a
conventional banking branch to the
Islamic mode. We now offer services
through a network of 226 branches,
including a wholesale bank branch
in Bahrain. Through this branch
network, we are able to offer our wide
range of products and services to our
valued customers. Given the current
economic conditions, our Bank would
emphasize on the consolidation of
recent expansion and operations.
Future expansion will be gradual and
incremental.
Islamic Banking
Islamic banking outreach was
enhanced significantly in 2009 to a
total of 31 Islamic Banking Branches
(IBBs) (including 2 sub-branches) in 15
major cities of the country, by adding
11 IBBs: 10 new ones and conversion
of a conventional banking branch.
By the Grace of Allah, the Bank’s
Islamic Banking Services Division
(IBSD) has performed well during the
period under review. Despite a late
start, Islamic banking operations
of the Bank are now amongst the
top players in its peer group i.e., 13
conventional banks with separate
stand-alone Islamic Banking
branches.
In line with Shariah requirements,
the Bank ensures that the funds
and products of Islamic banking
are explicitly managed without any
intermingle with the conventional
banking business. All funds obtained,
invested, and shared, are in Shariah
compliant modes of investments. A
range of Islamic banking products
and services are being offered by the
Bank in order to meet the customers’
demand for Shariah compliant
banking, including Islamic corporate
banking, Islamic investment banking,
Islamic trade finance, Islamic general
banking, and Islamic consumer
banking. To ensure the operation of
Islamic banking products in letter
and spirit, training in Islamic banking
is given great importance: most of
the staff in Islamic banking is now
fully conversant with the philosophy
of Islamic banking and the Islamic
banking products being offered by the
Bank.
We are confident that Islamic
Banking will continue to maintain
its rate of growth in order to deliver
balanced returns for its shareholders,
depositors, and employees. We
expect to reap the benefits of our
growth strategy and show continued
improvement in all Shariah compliant
areas of business.
Askari Investment
Management Limited
Askari Investment Management
Limited (AIML) is the first subsidiary
of the Bank and is regulated
under the Non-Banking Finance
Companies (NBFC) Rules 2003 and
Notified Entities Regulation, 2007,
and licensed by the Securities and
Exchange Commission of Pakistan
(SECP). The primary business of AIML
is to launch and manage mutual
funds investments. However, AIML
also offers advisory services to
institutional clients.
AIML operates five open-end funds, 1)
Askari Income Fund (AIF), size Rs. 2.10
billion (2008: Rs. 3.46 billion), 2) Askari
Asset Allocation Fund, size Rs. 253
million (2008:Rs. 250 million), 3) Askari
Islamic Income Fund, size Rs. 196.81
million (2008: Pre-IPO), 4) Askari
Islamic Asset Allocation Fund, size Rs.
111.25 million (2008: Pre-IPO) and 5)
Askari Sovereign Cash Fund, size Rs.
1,095.35 million (2008: Nil).
page | 61
Consolidated financial statements of
the Bank and AIML for the year ended
December 31, 2009 are included in
this report.
Askari Securities Limited
The Bank has controlling interest of
Askari Securities Limited (ASL) by
virtue of acquiring 74 percent shares
of ASL.
ASL is an incorporated public limited
company and a corporate member
of Islamabad Stock Exchange
(Guarantee) Limited, engaged
principally in share brokerage, and
investment advisory and consultancy
services. The performance of ASL
during 2009 showed a marked
improvement over the previous year.
With improving investor confidence
evident at the bourses, we believe
that it will show better results in the
following years.
Consolidated financial statements of
the Bank and ASL for the year ended
December 31, 2009 are included in
this report.
The pattern of shareholding at
the close of December 31, 2009 is
included in this report.
• the first prize of “The Best
Annual Report” for the financial
sector, instituted jointly by
The Institute of Chartered
Accountants of Pakistan and
The Institute of Cost and
Management Accountants of
Pakistan.
• the merit award for the South
Asia Federation of Accountants,
an APEC body of the SAARC
region.
We are thankful for their recognitions
of our work by esteemed professional
organizations.
page | 62
Key operating data and financial
data for the last ten years, in
summarized form, are included in
this Annual Report.
•
There are no statutory payments
on account of taxes, duties,
levies and charges which are
outstanding as of December
31, 2009, except as disclosed in
these financial statements.
•
The following is the value of
investment as at December 31,
2009:
–
Provident Fund Rs. 1,446.31
million, based on un-audited
financial statements (2008:
Rs. 936.68 million)
–
Gratuity Fund Rs. 498.69
million, based on un-audited
financial statements (2008:
Rs. 337.12 million )
•
During 2009, eight meetings of
the Board of Directors were held.
Attendance by each Director was
as follows:
Corporate and Financial
Reporting Framework
•
The Bank’s financial statements,
prepared by the management
of the Bank, present fairly its
state of affairs, the results of its
operations, changes in equity and
cash flows.
•
Proper books of accounts of the
Bank have been maintained.
•
Accounting policies have
been consistently applied in
preparation of these financial
statements except as stated
in the notes to the financial
statements and accounting
estimates are based on
reasonable and prudent
judgment.
•
Awards and Recognition
During the year, the Annual Report of
the Bank for the year 2008 won:
•
•
•
•
International Accounting
Standards, as applicable
to banking companies in
Pakistan, have been followed in
preparation of these financial
statements.
Lt. Gen. Javed Zia 8
The current system of internal
control is under constant review
by the internal audit department,
as are other systems and
procedures. This vigilance will
continue and identified weakness
in controls will be remedied
expeditiously.
Mr. Muhammad Riyazul Haque 7
The Board of Directors is satisfied
with the Bank’s ability to
continue as a going concern.
There have been no material
departures from the best
practices of corporate
governance as detailed in the
Listing Regulation No. 35 of
the Karachi Stock Exchange
(Guarantee) Limited.
(Chairman)
Lt. Gen.(R) Imtiaz Hussain 8
Maj. Gen. (R) Saeed Ahmed Khan 3
Mr. Zafar Alam Khan Sumbal 8
Mr. Shahid Mahmud 8
Mr. Ali Noormahomad Rattansey 6
Dr. Bashir Ahmad Khan 5
Mr. Tariq Iqbal Khan 5
Mr. Kashif Mateen Ansari 4
(Resigned)
Mr. M. R. Mehkari 8
Auditors
The Auditors, M/s A.F. Ferguson
& Co., Chartered Accounts have
completed their assignment for
the year ended December 31, 2009
and shall retire at the conclusion of
the 18th Annual General Meeting.
M/s A.F. Ferguson & Co., Chartered
Accounts shall also be completing
their maximum permissible term
of five years thus will not be
eligible for reappointment. Upon
recommendation of the Audit
Committee, the Board recommends
appointment of M/s KPMG Taseer
Hadi & Co., Chartered Accountants, as
the auditors for the year 2010.
On behalf of the Board, I will like to
thank the engagement and review
partners and other members of the
audit team of M/s A F Ferguson & Co,
for their professionalism and value
added contributions to the Bank
throughout their audit term of five
years. We profoundly value their work
with us.
Events after the balance
sheet date
During the year, the Bank initiated
the process of amalgamation of
Askari Leasing Limited (ALL) with
and into the Bank. The scheme of
amalgamation under section 48 of
the Banking Companies Ordinance,
1962 has been approved by the
shareholders of both companies in
the Extra Ordinary General Meetings
(EOGMs) of the Bank and ALL held
on December 21, 2009 and December
22, 2009 respectively and has also
been subsequently approved by
the Competition Commission of
Pakistan and the Securities and
Exchange Commission of Pakistan.
The final approval by the State Bank
of Pakistan has been received vide
letter No. BPRD (R&P-02)/62599/2010/1256 dated February
18, 2010, whereby the scheme of
amalgamation is effective within 30
days from the date of approval. The
effective date of amalgamation will
be March 3, 2010 as per decision of
the management of both entities.
Consequently, the Bank shall issue
28.273 million shares of the Bank to
the shareholders of ALL.
There have not been any material
events that occurred subsequent to
the date of the Statement of Financial
Position that require adjustments to
the enclosed financial statements.
the major trading partners of
Pakistan, remains a hindrance to
our growth potential. There are no
easy answers. Given the challenges
on hand, 2010 would therefore be a
year of consolidation and economic
stabilization.
Prospects for 2010
Acknowledgments
The key challenge for Pakistan’s
economy and policy makers is to
ensure consolidation of the economic
stability through continued fiscal
restraints and improvement in the
tax to GDP ratio, resolution of the
power/electricity crisis, control of
the inflationary pressures, and, last
but not the least, enhancing the
competitiveness of our exports.
The main risks to the economy
stem from the uncertainty on the
security situation and the war on
terror. Within the Pakistani banking
sector the rising trend of NPLs is a
major cause of concern. Continued
weakness in world economic growth,
particularly in the economies of
On behalf of the Board of the
Bank, I like to express my sincere
appreciation to the State Bank of
Pakistan and other regulatory bodies
for their guidance and support; to
the shareholders and customers of
the Bank for their patronage and
business; and to the employees of the
Bank for their continued dedication
and hard work.
For & on behalf of the Board
Rawalpindi
February 23, 2010
Lt Gen Javed Zia
Chairman
Board of Directors
page | 63
Combining knowledge
with skill that
contributes value for
each customer
page | 64
For the year ended December 31, 2009
Askari Bank Limited
page | 65
Askari Bank Limited | Financial Statements
This page is intentially left blank
page | 66
With the Code of Corporate Governance for the year ended December 31, 2009
This statement is being presented to comply with the Prudential Regulation No.XXIX, responsibilities of the Board of Directors,
issued vide BSD Circular No.15, dated June 13, 2002 and the Code of Corporate Governance (the Code) as contained in Listing
Regulations of the stock exchanges where the Bank’s shares are listed for the purpose of establishing a framework of good
governance, whereby a listed company is managed in compliance with the best practices of corporate governance.
The Bank has applied the principles contained in the Code in the following manner:
1.
The Bank encourages representation of independent non-executive directors and directors representing minority
interests on its Board of Directors. At present the Board includes 5 non-executive Directors of which 2 independent
Directors represent minority shareholders.
2.
The Directors have confirmed that none of them is serving as a director in more than ten listed companies, including
Askari Bank Limited, except Mr Tariq Iqbal Khan who has been exempted for the purpose of this clause by the Securities
and Exchange Commission of Pakistan (SECP). 3.
All Directors are resident and registered as taxpayers and none of them has defaulted in payment of any loan to a
banking company, a DFI or an NBFI or, being a member of a stock exchange, has been declared as defaulter by that
stock exchange.
4.
During the year one casual vacancy occurred on the Board, which was filled within the prescribed period.
5.
The Bank has prepared a statement of ethics and business practices, which has been signed by all the Directors and
employees of the Bank. 6.
The Board has developed a vision / mission statement, overall corporate strategy and significant policies of the Bank.
A complete record of particulars of significant policies along with the dates on which these were approved or amended
has been maintained.
7.
All the powers of the Board have been duly exercised and decisions on material transactions, including appointment
and determination of remuneration and terms and conditions of employment of the Chief Executive Officer, have been
taken by the Board.
8.
The meetings of the Board were presided over by the Chairman and the Board met at least once in every quarter.
Written notices of the Board meetings, along with agenda and working papers, were circulated at least seven days
before the meetings. The minutes of the meetings were appropriately recorded and circulated.
9.
The Board members participated in an orientation course to apprise them of their duties and responsibilities.
10.
The Board has approved appointment of Company Secretary, including his remuneration and terms and conditions
of employment, as determined by the Chief Executive Officer, however, appointment of Head of Internal Audit is in
process. 11.
The Directors’ Report for this year has been prepared in compliance with the requirements of the Code and fully
describes the salient matters required to be disclosed.
12.
The financial statements of the Bank were duly endorsed by the Chief Executive Officer and the Chief Financial Officer
before approval of the Board.
13.
The Directors, Chief Executive Officer and executives do not hold any interest in the shares of the Bank other than that
disclosed in the pattern of shareholding.
14.
The Bank has complied with all the corporate and financial reporting requirements of the Code.
page | 67
15.
The Board has formed an Audit Committee. It comprises of 3 members. All members are non-executive Directors
including the Chairman of the Committee.
16.
The meetings of the Audit Committee were held in every quarter prior to approval of interim and final results of the
Bank as required by the Code. The terms of reference of the Committee were fully complied with.
17.
The Board has set-up an effective internal audit function on a full time basis. 18.
The statutory auditors of the Bank have confirmed that they have been given a satisfactory rating under the quality
control review program of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of
the firm, their spouses and minor children do not hold shares of the Bank and that the firm and all its partners are
in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics, as adopted by the
Institute of Chartered Accountants of Pakistan.
19.
The statutory auditors or the persons associated with them have not been appointed to provide other services except
in accordance with the Listing Regulations and the auditors have confirmed that they have observed IFAC guidelines
in this regard. 20.
All material information required under the relevant rules have been provided to the stock exchanges and to the
Securities & Exchange Commission of Pakistan within the prescribed time limit.
21.
All related party transactions entered during the year were at arm’s length basis and these have been placed before
the Audit Committee and the Board of Directors. These transactions are duly reviewed and approved by the Audit
Committee and Board of Directors.
22.
We confirm that all other material principles contained in the Code have been complied with. Rawalpindi
February 23, 2010
page | 68
For and on behalf of the Board
Lt. Gen. Javed Zia
Chairman
On Statement of Compliance with Best Practices of Code of Corporate Governance
We have reviewed the Statement of Compliance with best practices contained in the Code of Corporate Governance prepared
by the Board of Directors of Askari Bank Limited (the Bank) to comply with Prudential Regulation No. XXIX, Responsibilities
of Board of Directors issued vide BSD Circular No. 15 dated June 13, 2002, Listing Regulation No. 35 of Karachi, Lahore and
Islamabad Stock Exchanges, where the Bank is listed.
The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the Bank.
Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of
Compliance reflects the status of the Bank’s compliance with the provisions of the Code of Corporate Governance and report
if it does not. A review is limited primarily to inquiries of the Bank’s personnel and review of various documents prepared by
the Bank to comply with the Code.
As part of our audit of financial statements we are required to obtain an understanding of the accounting and internal control
systems sufficient to plan the audit and develop an effective audit approach. We have not carried out any special review of
the internal control system to enable us to express an opinion as to whether the Board’s statement on internal control covers
all controls and the effectiveness of such internal controls.
Further, Sub-Regulation (xiii a) of Listing Regulation 35 notified by the Karachi Stock Exchange (Guarantee) Limited vide circular
KSE / N-269 dated January 19, 2009 requires the Bank to place before the Board of Directors for their consideration and
approval related party transactions, distinguishing between transactions carried out on terms equivalent to those that prevail
in arm’s length transactions and transactions which are not executed at arm’s length price recording proper justification for
using such alternative pricing mechanism. Further, all such transactions are also required to be separately placed before the
Audit Committee. We are only required and have ensured compliance of requirement to the extent of approval of related party
transactions by the Board of Directors and placement of such transactions before the Audit Committee. We have not carried
out any procedure to determine whether the related party transactions were undertaken at arm’s length price or not.
Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not
appropriately reflect the Bank’s compliance, in all material respects, as applicable to the Bank for the year ended December 31,
2009 with the best practices contained in the Code of Corporate Governance.
Islamabad
February 23, 2010
A.F. Ferguson & Co.
Name of engagement partner: S. Haider Abbas
page | 69
We have audited the annexed Statement of Financial Position of Askari Bank Limited (the Bank) as at December 31, 2009 and
the related profit and loss account, statement of changes in equity and cash flow statement, together with the notes forming
part thereof (here-in-after referred to as the financial statements), for the year then ended, in which are incorporated the
unaudited certified returns from the branches except for 20 branches which have been audited by us and 1 branch audited by
auditors abroad and we state that we have obtained all the information and explanations which, to the best of our knowledge
and belief, were necessary for the purposes of our audit.
It is the responsibility of the Bank’s Board of Directors to establish and maintain a system of internal control and prepare and
present the financial statements in conformity with approved accounting standards and the requirements of the Banking
Companies Ordinance, 1962 (LVII of 1962) and the Companies Ordinance, 1984 (XLVII of 1984). Our responsibility is to express
an opinion on these statements based on our audit.
We conducted our audit in accordance with the International Standards on Auditing as applicable in Pakistan. These standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
any material misstatement. An audit includes examining, on a test basis, evidence supporting amounts and disclosures in the
financial statements. An audit also includes assessing accounting policies and significant estimates made by management,
as well as, evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable
basis for our opinion and after due verification, which in the case of loans and advances covered more than sixty percent of
the total loans and advances of the Bank, we report that:
a)
in our opinion, proper books of account have been kept by the Bank as required by the Companies Ordinance, 1984 (XLVII
of 1984) and the returns referred to above received from the branches have been found adequate for the purposes of
our audit;
b)
in our opinion:
i)
the statement of financial position and profit and loss account together with the notes thereon have been
drawn up in conformity with the Banking Companies Ordinance, 1962 (LVII of 1962) and the Companies
Ordinance, 1984 (XLVII of 1984), and are in agreement with the books of account and are further in accordance
with accounting policies consistently applied;
ii)
the expenditure incurred during the year was for the purpose of the Bank’s business; and
iii)
the business conducted, investments made and the expenditure incurred during the year were in accordance
with the objects of the Bank and the transactions of the Bank which have come to our notice have been within
the powers of the Bank;
page | 70
c)
in our opinion and to the best of our information and according to the explanations given to us the statement of
financial position, profit and loss account, statement of changes in equity and cash flow statement together with
the notes forming part thereof conform with approved accounting standards as applicable in Pakistan and give the
information required by the Banking Companies Ordinance, 1962 (LVII of 1962), and the Companies Ordinance, 1984
(XLVII of 1984), in the manner so required and respectively give a true and fair view of the state of the Bank’s affairs as
at December 31, 2009 and its true balance of the profit, its changes in equity and cash flows for the year then ended;
and
d)
in our opinion, Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by
the Bank and deposited in the Central Zakat Fund established under Section 7 of that Ordinance.
Islamabad
February 23, 2010
A.F. Ferguson & Co.
page | 71
As at December 31, 2009
Rupees in ‘000
Notes
2009
2008
Assets
6
7
Lendings to financial institutions 8
Investments
9
Advances
10
11
Deferred tax assets
Other assets
12
19,385,843 8,364,261 4,614,059 67,046,033 135,034,499 9,846,440 –
10,036,311 16,029,635
3,954,814
4,479,754
35,677,755
128,818,242
8,266,458
–
8,964,480
254,327,446 206,191,138
Bills payable
13
Borrowings
14
15
Sub-ordinated loans
16
17
Other liabilities
18
2,945,670 19,300,163 205,970,227 5,994,900 –
333,925 4,833,489 2,584,828
15,190,148
167,676,572
2,996,100
–
12,987
4,759,140
239,378,374 193,219,775
Net assets
14,949,072 12,971,363
Share capital
19
Reserves
20
5,073,467 7,182,987 886,234 4,058,774
7,667,141
308,980
21
13,142,688 1,806,384 12,034,895
936,468
14,949,072 12,971,363
Liabilities
Represented By
Contingencies and commitments
22
The annexed notes 1 to 48 form an integral part of these financial statements.
M. R. Mehkari
page | 72
Ali Noormahomed Rattansey
Director
Director
Lt. Gen. Javed Zia
Chairman
Rupees in ‘000
Notes
2009
2008
25
26
22,661,754 13,629,096 18,393,313
10,650,719
9,032,658 7,742,594
Provision against non-performing loans and advances
10.5
Impairment loss on available for sale investments
Provision for impairment in the value of investments
9.2.1
Provision against reverse repo
8
Bad debts written off directly
2,324,377 431,058 76,784 82,674 – 3,824,778
–
508
–
247,311
2,914,893 4,072,597
Net mark-up / interest income after provisions
6,117,765 3,669,997
Non mark-up / interest income
Dividend income
Income from dealing in foreign currencies
Gain on sale of investments - net
27
Unrealised (loss) / gain on revaluation of investments
classified as held for trading - net Other income
28
1,307,699 162,537 538,445 143,717 1,257,584
173,621
873,512
36,743
(1,918)
404,221 22,384
343,156
Total non-markup / interest income
2,554,701 2,707,000
Non mark-up / interest expenses
8,672,466 6,376,997
29
Other provisions / write offs Other charges
30
6,995,857 – 34,368 5,904,169
459
10,987
Total non-markup / interest expenses
7,030,225 5,915,615
Extra ordinary / unusual items 1,642,241 – 461,382
–
Profit before taxation
1,642,241 461,382
562,099 119,827 (147,478)
17,363
(50,000)
107,794
534,448 75,157
Unappropriated profit brought forward
1,107,793 308,980 386,225
2,144,810
1,416,773 2,531,035
32
2.18 0.76
Taxation – current
– prior years’
– deferred
31
Profit available for appropriation
Basic / diluted earnings per share - Rupees
M. R. Mehkari
Director
Director
Lt. Gen. Javed Zia
Chairman
page | 73
Rupees in ‘000 Share Capital
Balance as at January 1, 2008
3,006,499 Net profit for the year ended December 31, 2008
Capital ReserveRevenue Reserves
Statutory
Reserve
2,835,466 – General Un-appropriated
Reserve
profit
4,112,870 – Total
2,144,810 12,099,645
– 386,225 386,225
– (77,245)
–
(641,560)
–
Transfer to:
Statutory reserve
– 77,245 General reserve – – – – – (450,975)
(450,975)
– – (1,052,275)
–
641,560 Final dividend - for the year ended December 31, 2007
declared subsequent to year end Bonus shares declared / issued subsequent
to year ended December 31, 2007 1,052,275 Balance as at January 1, 2009
2,912,711 – 4,754,430 – 308,980 12,034,895
– 1,107,793 1,107,793
– (221,559)
–
(308,980)
–
Transfer to:
Statutory reserve
– General reserve – 221,559 – 308,980 Bonus shares declared / issued subsequent
to year ended December 31, 2008 1,014,693 Balance as at December 31, 2009
5,073,467 – (1,014,693)
3,134,270 4,048,717 – 886,234 13,142,688
M. R. Mehkari
page | 74
Director
Director
–
Lt. Gen. Javed Zia
Chairman
Cash Flow Statement
Rupees in ‘000
Note
2009
2008
Cash flow from operating activities
Less: Dividend income
1,642,241 (162,537)
461,382
(173,621)
1,479,704 287,761
Adjustments:
Depreciation
Provision against non-performing advances (net)
Provision for impairment in the value of investments Provision against reverse repo
Bad debts written of directly
Net (profit) / loss on sale of operating fixed assets
Provision against other assets
645,958 2,324,377 76,784 82,674 – (3,683)
– 511,063
3,824,778
508
–
247,311
3,989
459
3,126,110 4,588,108
4,605,814 4,875,869
(Increase) / decrease in operating assets
Held for trading securities
Advances
Other assets (excluding advance taxation)
(791,979)
42,346 (8,540,634)
(1,015,675)
9,139,389
310,530
(32,110,169)
(2,501,809)
(10,305,942)
(25,162,059)
Increase / (decrease) in operating liabilities
Bills payable
Borrowings Deposits and other accounts
Other liabilities (excluding current taxation)
360,842 4,110,015 38,293,655 75,174 (42,223)
(2,363,377)
24,639,865
1,532,773
42,839,686 23,767,038
Cash flow before tax
Income tax paid
37,139,558 (730,428)
3,480,848
(884,285)
Net cash flow from operating activities
36,409,130 2,596,563
Net investments in available-for-sale securities
Net investments in held-to-maturity securities
Net investments in subsidiaries/ associate Dividend income
Investments in operating fixed assets - net of adjustment
Sale proceeds of operating fixed assets - disposed off
(31,257,524)
1,108,448 – 154,883 (2,235,599)
13,342 2,477,452
(617,596)
(72,000)
162,451
(1,843,902)
48,976
Net cash flow (used in) / from investing activities
(32,216,450)
155,381
Receipt / (Payments) of sub-ordinated loans
Dividends paid
2,998,800 (825)
(1,200)
(444,404)
Net cash flow from / (used in) financing activities
2,997,975 (445,604)
Increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
33
7,190,655 20,659,449 2,306,340
18,353,109
Cash and cash equivalents at end of the year
27,850,104 20,659,449
Cash flow from investing activities
Cash flow from financing activities
33
M. R. Mehkari
Director
Director
Lt. Gen. Javed Zia
Chairman
page | 75
1.
STATUS AND NATURE OF BUSINESS
Askari Bank Limited (the Bank) was incorporated in Pakistan on October 09, 1991 as a Public Limited Company and
is listed on the Karachi, Lahore and Islamabad Stock Exchanges. The registered office of the Bank is situated at AWT
Plaza, The Mall, Rawalpindi.
The Bank obtained its business commencement certificate on February 26, 1992 and started operations from April 01,
1992. Army Welfare Trust directly and indirectly holds a significant portion of the Bank’s share capital at the year end.
The Bank has 226 branches (2008: 200 branches); 225 in Pakistan and Azad Jammu and Kashmir, including 31 (2008:
18) Islamic Banking branches, 22 (2008: 11) sub-branches and a wholesale bank branch in the Kingdom of Bahrain.
The Bank is a scheduled commercial bank and is principally engaged in the business of banking as defined in the
Banking Companies Ordinance, 1962.
2.
BASIS OF PRESENTATION
2.1
These financial statements have been presented in accordance with the requirements of format prescribed by the
State Bank of Pakistan’s BSD Circular No 4 dated February 17, 2006.
2.2
In accordance with the directives of the Federal Government regarding shifting of the banking system to Islamic
modes, the State Bank of Pakistan (SBP) has issued a number of circulars. One permissible form of trade related mode
of financing comprises of purchase of goods by the Bank from its customers and resale to them at appropriate markup in price on a deferred payment basis. The purchases and sales arising under these arrangements are not reflected
in these financial statements as such but are restricted to the amount of facilities actually utilized and the appropriate
portion of mark-up thereon.
The Bank has adopted IAS 1 (Revised) “Presentation of Financial Statements”, which became effective from January
1, 2009. Surplus/(deficit) on revaluation of land and available for sale investments has been reflected below equity in
terms of requirements of above referred format prescribed by SBP under BSD Circular No. 4 dated February 17, 2006.
Since there are no other components of other comprehensive income that were recognised in equity therefore the
Statement of Other Comprehensive Income has not been prepared. As the change in accounting policy only impacts
presentation aspects, there is no impact on profit for the year.
2.3
The financial results of the Islamic banking branches have been consolidated in these financial statements for reporting
purposes, after eliminating material inter-branch transactions / balances. Key figures of the Islamic banking branches
are disclosed in Annexure II to these financial statements.
3.
STATEMENT OF COMPLIANCE
These financial statements have been prepared in accordance with the approved accounting standards as applicable
in Pakistan and the requirements of the Companies Ordinance, 1984 and the Banking Companies Ordinance, 1962.
Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the
International Accounting Standard Board (IASB) as are notified under the Companies Ordinance, 1984, provisions of
and directives issued under the Companies Ordinance, 1984 and the Banking Companies Ordinance, 1962 or directives
issued by the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan. In case requirements
differ, the provisions or directives of the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 or the
requirements of the said directives shall prevail.
International Accounting Standard 39, “Financial Instruments: Recognition and Measurement”, International
Accounting Standard 40, “Investment Property” and International Financial Reporting Standard 7,”Financial
Instruments: Disclosure” are not applicable to banking companies in Pakistan. Accordingly, the requirements of these
Standards have not been considered in the preparation of these financial statements. However, investments have
been presented in accordance with the requirements of the format prescribed by the State Bank of Pakistan’s BSD
Circular No. 4 dated February 17, 2006 and have been classified in accordance with the requirements of BSD Circular
No. 10 dated July 13, 2004.
a)
Standards, amendments and interpretations effective in 2009 but not relevant
The following standards, amendments and interpretations to published standards are mandatory for accounting
periods beginning on or after January 1, 2009 but they are not relevant to the Bank’s operations.
IAS 20
IAS 23
IAS 29
IAS 31
IAS 32
IAS 41
IFRS 5
IFRS 7
IFRIC 15
page | 76
Accounting for government grants and disclosure of government assistance
Borrowing costs
Financial reporting in hyperinflationary economies
Interest in joint ventures
Financial instruments: Presentation
– Amendments relating to puttable instruments and obligations arising on liquidation
Agriculture
Non-current assets held-for-sale and discontinued operations
Financial Instruments: Disclosures
Agreements for the construction of real estates
b)
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early
adopted by the bank
Certain minor amendments in following International Accounting Standards (IASs) have been introduced through
IASB’s annual improvements published in April 2009.
Effective for periods
beginning on or after
IAS 1
Presentation of financial statements
January 1, 2010
IAS 7
Statement of cash flows
January 1, 2010
IAS 17
Leases
January 1, 2010
IAS 36
Impairment of assets
January 1, 2010
IAS 38
Intangible assets
IFRIC 14
c)
IAS 19 – The limit on a Defined Benefit Assets, minimum funding
requirements and their interaction
July 1, 2009
January 1, 2011
Amendments and interpretations to existing standards that are not yet effective and not relevant to the bank’s
operations.
IFRS 1
First-time adoption of International Financial Reporting Standards
January 1, 2010
IFRS 2
Share-based payments
January 1, 2010
IFRS 3
Business combinations
IFRS 5
January 1, 2010
IFRS 8
Operating segments
January 1, 2010
IFRS 9
Financial Instruments
January 1, 2013
IAS 24
Related Party Disclosures
January 1, 2011
IAS 27
Consolidated and separate financial statements
IAS 32
– Amendments relating to classification of right issues
July 1, 2009
July 1, 2009
February 1, 2010
IFRIC 9
Reassessment of embedded derivatives
July 1, 2009
IFRIC 16
Hedges of a net investment in foreign operations
July 1, 2009
IFRIC 17
Distribution of non-cash assets to owners
July 1, 2009
IFRIC 18
Transfer of assets from customers
July 1, 2009
IFRIC 19
Extinguishing Financial Liabilities with Equity Instruments
July 1, 2010
4.
BASIS OF MEASUREMENT
These financial statements have been prepared under the historical cost convention as modified for certain investments
and freehold and leasehold land which are shown at revalued amounts.
The preparation of financial statements in conformity with approved accounting standards, as applicable in Pakistan,
requires the use of certain accounting estimates and judgments in application of accounting policies. The areas
involving a higher degree of judgments or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in note 43.
5.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
5.1
Cash and cash equivalents
Cash and cash equivalents comprise of cash and balances with treasury banks, balances with other banks and call
money lendings.
5.2
Sale and repurchase agreements
Securities sold under repurchase agreement (repo) are retained in the financial statements as investments and a
liability for consideration received is included in borrowings. Conversely, consideration for securities purchased under
resale agreement (reverse repo) are included in lendings to financial institutions. The difference between sale and
repurchase / purchase and resale price is treated as mark-up / return expensed and earned, as the case may be. Repo
and reverse repo balances are reflected under borrowings from and lendings to financial institutions respectively.
page | 77
5.3
Investments
Investments are classified as follows:
Held for trading
These represent securities acquired with the intention to trade by taking advantage of short-term market / interest rate
movements. These are marked to market and surplus / deficit arising on revaluation of ‘held for trading’ investments
is taken to profit and loss account in accordance with the requirements of the State Bank of Pakistan’s BSD Circular
Available for sale
These represent securities which do not fall under ‘held for trading’ or ‘held to maturity’ categories. In accordance
with the requirements of the State Bank of Pakistan’s BSD Circular No. 20 dated August 04, 2000, available for sale
securities for which ready quotations are available on Reuters Page (PKRV) or Stock Exchanges are valued at market
value and the resulting surplus / deficit is kept in a separate account and is shown below the shareholders’ equity in
the statement of financial position. Foreign securities are carried at fair value, based on their current bid prices in active
markets. Where the markets are not active or the securities are unlisted, fair value is estimated by using valuation
techniques.
Held to maturity
These represent securities acquired with the intention and ability to hold them upto maturity. These are carried
at amortized cost in accordance with the requirements of the State Bank of Pakistan’s BSD Circular No. 14 dated
September 24, 2004.
Investments in subsidiaries and associate are carried at cost.
Unquoted equity securities are valued at the lower of cost and break-up value. Break-up value of equity securities is
calculated with reference to the net assets of the investee as per the latest audited financial statements. Investments
in other unquoted securities are valued at cost less impairment losses, if any.
All purchases and sale of investment that require delivery within the time frame established by regulations or market
convention are recognized at the trade date, which is the date the Bank commits to purchase or sell the investments.
5.4
Advances
Advances are stated net of provisions for non-performing advances. Provision for advances is determined in
accordance with the requirements of the Prudential Regulations issued by the State Bank of Pakistan from time to
time. In addition, a general provision is maintained for advances other than consumer advances as per details given in
note 10.5.2.
The provisions against non-performing advances are charged to the profit and loss account. Advances are written off
when there is no realistic prospect of recovery.
The State Bank of Pakistan has notified for adoption of “Islamic Financial Accounting Standard 2 Ijarah” (IFAS-2) which
is applicable for accounting period beginning on or after January 01, 2009, Consequent to the adoption of IFAS-2, all
such Ijarahs booked on or after January 01, 2009 are stated at cost less accumulated depreciation and impairment if
any, and are shown under advances.
The rentals received / receivable on above Ijarahs are recorded as income / revenue. Depreciation on Ijarah assets is
charged to profit and loss account by applying the straight line method whereby the depreciable value of Ijarah assets
is written off over the Ijarah period. The Bank charges depreciation from the date of delivery of respective assets to
Mustajir upto the date of maturity / termination of Ijarah agreement.
5.5
Capital work-in-progress, operating fixed assets and depreciation
Capital work-in-progress
Capital work-in-progress is stated at cost.
Owned assets
Fixed assets are stated at cost less impairment losses and accumulated depreciation except for freehold / leasehold
land. Land is carried at revalued amounts which are not depreciated.
Land is revalued by professionally qualified valuers with sufficient regularity to ensure that the net carrying amount
does not differ materially from their fair value. Surplus / (deficit) arising on revaluation of fixed assets is credited /
(debited) to the surplus on revaluation of assets account and is shown below the shareholders’ equity in the statement
of financial position. Except to the extent actually realised on disposal of land which are revalued, the surplus on
revaluation of land shall not be applied to set-off or reduce any deficit or loss, whether past, current of future, or in
any manner applied, adjusted or treated so as to add to the income, profit or surplus of the Bank or utilized directly or
indirectly by way of dividend or bonus.
Depreciation is computed over the estimated useful lives of the related assets at the rates set out in note 11.2. The cost
of assets is depreciated on the diminishing balance method, except for vehicles, carpets, renovations and other assets
which are depreciated on a straight line basis. Depreciation is charged for the full month on purchase / acquisition of
page | 78
an asset while no depreciation is charged in the month of disposal of an asset. Maintenance and normal repairs are
charged to profit and loss account as and when incurred. Major renewals and improvements are capitalized. Gains and
losses on disposal of operating fixed assets are taken to the profit and loss account.
Assets subject to finance lease
Assets held under finance lease are accounted for by recording the assets and related liabilities at the amounts
determined on the basis of lower of fair value of the assets and the present value of minimum lease payments.
Finance charge is allocated to the accounting periods in a manner so as to provide a constant periodic rate of charge
on the outstanding liability. Depreciation is charged on leased assets on the basis similar to that of the owned assets.
5.6
Impairment
The carrying amount of the Bank’s assets are reviewed at the date of statement of financial position to determine
whether there is any indication of impairment. If such indications exist, the asset’s recoverable amount is estimated
in order to determine the extent of the impairment loss, if any. Impairment loss is recognised as expense in the profit
and loss account. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had
been recognised.
5.7
Taxation
Current
Provision for current tax is the expected tax payable on the taxable profit for the year using tax rates applicable at the
date of statement of financial position and any adjustment to tax payable for previous years.
Deferred
Deferred tax is provided for by using the balance sheet liability method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for taxation
purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the
carrying amount of assets and liabilities using tax rates enacted or substantially enacted at the date of statement of
financial position, expected to be applicable at the time of its reversal. A deferred tax asset is recognised only to the
extent that it is probable that the future taxable profit will be available and credits can be utilized. Deferred tax assets
are reduced to the extent it is no longer probable that the related tax benefit will be realised.
Deferred tax, on revaluation of investments, if any, is recognised as an adjustment to surplus / (deficit) arising on such
revaluation.
5.8
Staff retirement benefits
Defined benefit plan
The Bank operates an approved funded gratuity scheme for all its regular employees. Contributions are made in
accordance with the actuarial recommendation. The actuarial valuation is carried out periodically using “Projected Unit
Credit Method”. The actuarial gains / losses in excess of corridor limit (10% of higher of present value of obligation and
fair value of plan assets) are recognized over the expected remaining working life of its employees.
Defined contribution plan
The Bank operates a recognised provident fund scheme for all its regular employees for which equal monthly
contributions are made both by the Bank and by the employees at the rate of 8.33% of the basic salary of the employee.
Compensated absences
The Bank grants compensated absences to all its regular employees. Liability for unfunded scheme is recognized on
the basis of actuarial valuation using the “Projected Unit Credit Method”. Provision for the year is charged to profit and
loss account. The amount recognised in the balance sheet represents the present value of defined benefit obligations.
5.9
Revenue recognition
Mark-up / interest on advances and return on investments is recognised on accrual basis except on classified advances
which is recognized on receipt basis in compliance with Prudential Regulations issued by the State Bank of Pakistan.
Fees, commission and brokerage income is recognised at the time of performance of service.
Dividend income is recognised when Bank’s right to receive the income is established.
Gain and losses on sale of investments are included in income currently.
5.10 Foreign currencies
Foreign currency transactions
Foreign currency transactions are translated into Pak. Rupee at the exchange rates prevailing on the date of transaction.
Monetary assets and liabilities in foreign currencies are translated to Pak. Rupee at the exchange rates prevailing at
the date of statement of financial position. Outstanding foreign bills purchased are valued at the rates applicable to
the remaining maturities. Exchange gains and losses are included in profit and loss account currently.
page | 79
Foreign operation
The monetary assets and liabilities of wholesale bank branch are translated to Pak. Rupee at the exchange rates
prevailing at the date of statement of financial position. The results of foreign operations are translated at the average
rate of exchange for the year.
Translation gains and losses
Translation gains and losses are included in the profit and loss account.
Commitments
Commitments for outstanding forward foreign exchange contracts are valued at the rates applicable to the remaining
maturities. Contingent liabilities / commitments for letters of credits and letters of guarantees denominated in foreign
currencies are translated into Pak. Rupee at the rates of exchange ruling on the date statement of financial position.
5.11 Provisions
Provisions are recognised when there are present, legal or constructive obligations as a result of past events, it is
probable that an out flow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate of the amounts can be made. Provision for guarantee claims and other off balance sheet obligations
is recognized when intimated and reasonable certainty exists to settle the obligations. Expected recoveries are
recognized by debiting customer accounts. Charge to profit and loss account is stated net off expected recoveries.
5.12 Off-setting
Financial assets and financial liabilities are only set-off and the net amount is reported in the financial statements
when there is a legally enforceable right to set-off the recognised amount and the Bank intends either to settle on a
net basis, or to realise the assets and to settle the liabilities simultaneously.
5.13 Appropriations subsequent to the date of statement of financial position
Appropriations subsequent to year end are recognised during the year in which those appropriations are made.
5.14 Segment reporting
A segment is a distinguishable component of the Bank that is engaged in providing products or services (business
segment) or in providing product or services within a particular economic environment (geographical segment), which
is subject to risks and rewards that are different from those of other segments. The Bank’s primary format of reporting
is based on business segments.
5.14.1 Business segment
Corporate financing
Corporate financing includes corporate and investment banking activities such as mergers and acquisition, underwriting,
privatization, securitisation, IPO’s related activities and secondary private placements.
Trading and Sales
Trading and sales includes the Bank’s treasury and money market activities classified as held for trading.
Retail Banking
Retail banking segment provides services to small borrowers and include loans, deposits and other transactions with
retail customers and credit card business.
Commercial Banking
Commercial banking segment provides services related to project finance, export finance, trade finance, leasing, lending,
guarantees, bills of exchange and deposits from corporate customers.
Payment and settlement
Payment and settlement includes income from payments and collections, funds transfer, clearing and
settlement.
Agency services
Agency services include income from rent of lockers provided to customers.
Sub-ordinated loans
It represents Term Finance Certificates issued by the Bank.
5.14.2 Geographical segments
The Bank operates in two geographic regions; Pakistan and the Middle East.
5.15 Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment
in which the Bank operates. The financial statements are presented in Pak. Rupee, which is the Bank’s functional
currency.
page | 80
Rupees in ‘000
6.
Notes
2009
2008
CASH AND BALANCES WITH TREASURY BANKS
In hand:
Local currency
3,277,097 Foreign currencies
1,095,997 2,843,732
994,256
4,373,094 3,837,988
19,920 15,378
With the State Bank of Pakistan in:
Local currency current accounts
6.1
8,030,082 Foreign currency current account
6.1
1,658,246 Foreign currency deposit account
6.2
4,832,003 6,455,757
1,360,567
3,734,701
National Prize Bonds
14,520,331 11,551,025
With National Bank of Pakistan in :
472,498 625,244
19,385,843 16,029,635
6.1
Deposits are maintained with the State Bank of Pakistan to comply with its requirements issued from time to time.
6.2
These represent statutory cash reserve maintained against foreign currency deposit mobilised under Foreign Exchange
Circular No. 25 issued by the State Bank of Pakistan and is remunerated at 0.00% (2008: 0.00%) per annum.
Rupees in ‘000
7.
Note
2009
2008
BALANCES WITH OTHER BANKS
In Pakistan
On current accounts
423,913 On deposit accounts
1,071,723 451,035
113,763
Outside Pakistan
On current accounts
1,476,070 On deposit accounts
7.1
5,392,555 656,115
2,733,901
3,954,814
7.1
8,364,261 These represent overnight to three months placements with correspondent banks, carrying interest rates determined
with respect to underlying currency benchmarks at the rates ranging from 0.03% to 0.10% (2008: 0.1% to 3%) per annum
receivable on maturity.
Rupees in ‘000
Notes
2009
2008
8.
LENDINGS TO FINANCIAL INSTITUTIONS
Call money lendings 8.1
100,000 675,000
Repurchase agreement lendings (reverse repo) Purchase under resale arrangement of equity securities 8.2
8.3
3,866,733 630,000 2,554,754
1,150,000
Others
4,496,733 100,000 3,704,754
100,000
Less: Provision against reverse repo
4,696,733 (82,674)
4,479,754
–
Lendings to financial institutions - net of provision
4,614,059 4,479,754
Particulars of provision against reverse repo
Opening balance
– –
Charge for the year
Reversals
82,674 – –
–
82,674 –
82,674 –
Closing balance
page | 81
8.1
These carry mark-up at 12.6% (2008: 12.5% to 20%) per annum.
8.2
These are secured against underlying Government Securities, the differential between the contracted rate and resale
price is amortised over the period of related contracts and recorded under mark-up/return/interest earned. These
carry mark-up at rates ranging from 12% to 12.4% (2008: 12% to 14.9%) per annum and maturities of upto 3 (2008:
upto 2) months.
8.3
These represent shares of companies purchased under resale agreement carrying mark-up at rates ranging from
16.5% to 18.01% (2008: 18% to 18.01%) per annum with maturity of upto 1 (2008: upto 1) month. These include lending
under repurchase agreement amounting to Rs. Nil (2008: Rs. 500,000 thousand) to a related party.
Rupees in ‘000
8.4
Particulars of lending
In local currency In foreign currencies 2009
2008
4,696,733 – 4,479,754
–
4,696,733 4,479,754
2009
Held by
Rupees in ‘000
the Bank
Further
given as
Held by
collateral
Total
the Bank
2008
Further
given as
collateral
Total
8.5 Securities held as collateral against
lendings to financial institutions
Market Treasury Bills
Pakistan Investment Bonds
Purchase under resale arrangement of listed shares
3,631,733 235,000 – – 3,631,733 235,000 630,000 – 4,496,733 – page | 82
2,554,754 – – – 2,554,754
–
630,000 1,150,000 – 1,150,000
4,496,733 3,704,754 – 3,704,754
9.
INVESTMENTS
2009
Rupees in ‘000
Notes
Given as
collateral
Total
9.1
Held by
the Bank
Held by
the Bank
2008
Given as
collateral
Total
Investments by types:
Fully paid ordinary shares
116,410 – Available for sale securities
Market Treasury Bills 33,556,454 4,186,443 Pakistan Investment Bonds 4,645,193 336,807 Fully paid ordinary shares
2,729,146 – Fully paid preference shares
9.5
95,000 – Askari Income Fund - Units 9.7
888,668 – Askari Islamic Income Fund 9.7
100,000 – Askari Islamic Asset Allocation Fund 9.7
100,000 – Term Finance Certificates
13,481,689 – National Investment Trust (NIT) Units
278,472 – National Investment Trust (NIT)
Government Bond Fund
100,000 – Sukuk - Certificates
9.8
1,511,289 – Foreign securities
9.9
195,965 – 57,681,876 4,523,250 116,410 134,454 – 134,454
37,742,897 4,982,000 2,729,146 95,000 888,668 100,000 100,000 13,481,689 278,472 15,276,144 3,086,099 1,868,417 125,000 986,265 100,000 100,000 6,707,845 196,955 767,310 44,000 – – – – – – – 16,043,454
3,130,099
1,868,417
125,000
986,265
100,000
100,000
6,707,845
196,955
– – – –
1,508,280
181,287
100,000 1,511,289 195,965 – 1,508,280 181,287 62,205,126 30,136,292 781,702 1,133,369 1,261,681 167,306 897,508 421,208 1,029,907 1,516,837 948,676 949,330 930,979 395,493 –
–
–
–
–
–
1,029,907
1,516,837
948,676
949,330
930,979
395,493
– 4,662,774 5,771,222 – 5,771,222
Investment in associate
Askari General Insurance Company Limited 9.10
11,182 – 11,182 11,182 – 11,182
Investment in subsidiaries
Askari Investment Management Limited
9.4
135,000 – Askari Securities Limited
9.4
77,789 – 135,000 77,789 135,000 77,789 – – 135,000
77,789
67,208,281 36,265,939 Held to maturity securities
Term Finance Certificates
781,702 –
Pakistan Investment Bonds 1,133,369 –
Government of Pakistan Sukuk - Bonds
9.2.4
1,261,681 –
Government of Pakistan Euro Bonds
9.2.4
167,306 –
Sukuk - Certificates
9.11
897,508 –
Credit Linked Notes
9.12
421,208 –
Investment at cost 4,662,774 62,685,031 4,523,250 Less: Provision for impairment in value
of investments in 9.2.2
– unlisted shares
(5,680)
– – Sukuk certificates
(75,000)
–
(5,680)
(75,000)
(3,896)
– 811,310 30,947,602
811,310 – – (3,896)
–
Investments (net of provision)
62,604,351 4,523,250 Add / (less):
Unrealised (deficit) / surplus on revaluation
of held for trading securities - net
(1,918)
– (Deficit) / surplus on revaluation of available
for sale securities - net
(71,646)
(8,004)
67,127,601 36,262,043 (1,918)
22,384 (79,650)
(1,413,392)
(4,590)
(1,417,982)
67,046,033 34,871,035 806,720 35,677,755
Total investments at market value 62,530,787 4,515,246 811,310 37,077,249
– 37,073,353
22,384
page | 83
Rupees in ‘000
9.2
Notes
2009
2008
Investments by segments:
Federal Government Securities
9.2.3
Pakistan Investment Bonds Government of Pakistan Sukuk Bonds
9.2.4
9.2.4
Sukuk Certificates
37,742,897 6,115,369 1,261,681 167,306 617,508 16,043,454
4,646,936
948,676
949,330
660,979
45,904,761 23,249,375
3,889,726 268,469 3,144,638
268,469
4,158,195 3,413,107
9.5
95,000 125,000
9.6
Listed Term Finance Certificates Unlisted Term Finance Certificates
1,647,656 12,615,735 1,252,367
6,485,385
14,263,391 7,737,752
195,965 421,208 181,287
395,493
617,173 576,780
Other Investments
National Investment Trust (NIT) - Units
National Investment Trust (NIT) Government Bond Fund
1,791,289 278,472 100,000 1,778,280
196,955
–
2,169,761 1,975,235
Total investment at cost Less: Provision for impairment in value of investments
in unlisted shares
9.2.1
67,208,281 37,077,249
(80,680)
(3,896)
Investments (net of provisions)
(Less) / add: Unrealised (deficit) / surplus on revaluation of held
for trading securities - net
Deficit on revaluation of available for sale securities - net
67,127,601 37,073,353
(1,918)
(79,650)
22,384
(1,417,982)
67,046,033 35,677,755
3,388
Fully paid up ordinary shares / units
Listed companies / funds
Unlisted companies
9.3
9.4
Fully paid preference shares
Listed companies
Foreign Securities
Mena Transformation Fund
9.9
Credit Linked Notes
9.12
Total investments at market value 9.2.1 Particulars of provision for impairment in value of investments
Opening balance
3,896 Charge for the year
Reversals 76,784 – 508
–
76,784 508
80,680 3,896
Available for sale securities
Fully paid ordinary shares - unlisted company
Sukuk certificates
5,680 75,000
3,896
–
80,680
3,896
Closing balance
9.2.2 Particulars of provision in respect of type and segment
page | 84
9.2.3 Principal terms of investments in Federal Government Securities
Name of investment
Maturity
Principal Payment Rate
February 2010 to December 2010 On maturity Pakistan Investment Bonds
December 2010 to September 2019 On maturity Government of Pakistan Sukuk Bonds
January 2010 On maturity Government of Pakistan Euro Bonds
March 2016 On maturity Sukuk Certificates
– House Building Finance Corporation
May 8, 2014 Semi-annually – Pakistan Domestic Sukuk Company Ltd. September 26, 2011 On maturity – Karachi Shipyard and Engineering Works February 04, 2016 Semi-annually – Sui Southern Gas Company Limited
June 28, 2012 Semi-annually – WAPDA
July 13, 2017 On maturity Coupon
Payment
11.42% to 13.9%
8% to 14%
6 months LIBOR plus 2.2%
7.13%
at maturity
semi-annually
semi-annually
6 months KIBOR
plus 1%
Weighted average
yield of 6 months
market treasury
bills
6 months KIBOR
plus 0.4%
6 months KIBOR
plus 0.8%
6 months KIBOR
minus 0.25%
semi-annually
semi-annually
semi-annually
semi-annually
semi-annually
semi-annually
9.2.4 These represent investments by the wholesale bank branch.
9.3
Investments in listed companies shares / Units
Paid-up value
No. of ordinary shares /
per share/
certificates / units
certificate/unit
2009
– 584,200 – 1,758,701 75,000 41,000 – 1,300,000 2,500,000 3,056,611 8,368,657 1,000,000 1,000,000 1,009,971 500,000 10,257,114 235,620 260,000 294,520 2,757,095 3,850,000 – 1,059,304 – – 364,061 1,133,300 1,924,902 – – – – – – – 534,000 2008
5,000,000 100,086 970 – 3,387 40,881 888 1,107,159 2,500,000 3,056,611 9,798,740 1,000,000 1,000,000 – 500,000 6,350,000 54,300 101,455 632 595 462,939 202 181,165 61 11,320 113,400 798,243 49,352 701 86 524 81,771 21,124 3,575 151 113,050 Rupees
– 83.83 – 6.42 61.56 1.04 – 39.86 98.06 3.66 106.19 100.00 100.00 99.01 4.85 4.19 52.60 331.91 143.99 26.95 13.58 - 5.87 – – 12.55 33.30 31.70 – – – – – – – 138.09 Name of companies / mutual funds
ABL Income Fund
Adamjee Insurance Company Limited
Al-Abbas Cement Industries Limited
Al-Meezan Mutual Fund
Allied Bank Limited
Arif Habib Bank Limited
Arif Habib Limited
Arif Habib Securities Limited
Askari Asset Allocation Fund
Askari General Insurance Company Limited – note 9.10
Askari Income Fund
Askari Islamic Asset Allocation Fund
Askari Islamic Income Fund
Askari Sovereign Cash Fund
Atlas Bank Limited
Atlas Fund of Funds
Attock Cement Pakistan Limited
Attock Petroleum Limited
Attock Refinery Limited
Azgard Nine Limited
Bank Alfalah Limited
Bank Al-Habib Limited
Bank Islami Pakistan Limited
BOC Pakistan Limited
Bosicor Pakistan Limited
Cherat Cement Company Limited
Crescent Steel Mills Limited
D. G. Khan Cement Company Limited
D.S. Industries Limited
Dawood Equities Limited
Dawood Lawrencepur Limited
Dewan Cement Limited
Dewan Salman Fibres Limited
Dost Steel Mills Limited
EFU General Insurance Limited
Engro Chemical (Pakistan) Limited
2009
2008
Rupees in ‘000
– 48,972 – 11,295 4,617 43 – 51,814 245,141 11,182 888,667 100,000 100,000 100,000 2,427 42,934 12,393 86,295 42,409 74,293 52,265 – 6,218 – – 4,569 37,736 61,029 – – – – – – – 73,739 50,000
29,380
3
–
114
42
66
76,499
245,141
11,182
986,265
100,000
100,000
–
5,256
57,514
3,985
42,518
41
11
14,771
5
2,899
7
37
3,279
64,821
1,126
9
1
23
279
20
29
18
25,012
page | 85
Paid-up value
per share/
certificate/unit
2009
– 3,000,000 1,600,000 – – – 1,108,005 600,000 – 1,886,187 509,342 3,900,000 – 5,400,000 130,000 – 3,585,000 – 1,000,000 – 1,038,000 6,231,000 – 1,760,093 1,239,613 1,830,000 – 335,000 – 6,000,000 1,610,000 2,100,000 1,300,000 240,000 150,000 10,726,500 1,300,000 200,000 575,000 – 513,300 7,511,000 546,313 – 650,000 553,675 100,000 – 2,800,000 – 1,800,000 4,181,800 – 2,059,900 – 100,568 1,700,000 – 139,700 – 3,284,204 2,520,000 1,718,264 page | 86
2008
480 969,606 2,213,915 1,827 6,280 75 730,000 219,392 100,000 1,172,187 156,927 1,613,280 6,195 1,500,000 50,029 156 7,428 2,452 189,941 254,814 261 – 6,090 140,000 1,034,336 1,077 69 4,704 516,899 743,500 204,809 640,000 347,946 110,000 1,865 4,300,000 137,500 6,204 587,974 13,812 300,000 7,508,500 218,700 556 882,599 187,380 153,906 4,234 228,201 7,917 1,427,000 1,033,719 4,000 1,696,825 352 100,568 650,000 30 60,875 2,483 2,018,600 1,234,728 5,901 Rupees
– 8.44 26.13 – – – 3.18 114.52 – 4.18 20.82 20.84 – 3.53 189.19 – 27.70 – 5.08 – 17.18 4.72 – 38.25 62.98 4.42 – 145.37 – 6.00 14.45 5.69 73.64 198.03 29.34 6.03 10.80 71.50 71.23 – 144.00 10.00 108.24 – 142.74 146.55 6.50 – 34.93 – 5.05 18.64 – 16.00 – 39.67 4.33 – 247.86 – 11.07 36.70 13.72 Name of companies / mutual funds
Eye Television Network Limited
Fauji Cement Company Limited
Fauji Fertilizer Bin Qasim Limited Fauji Fertilizer Company Limited
Faysal Bank Limited
First National Equities Limited
Golden Arrow Selected Stock Fund
Habib Bank Limited
HBL Stock Fund
Hira Textile Mills Limited
Honda Atlas Cars (Pakistan) Limited
Hub Power Company Limited
ICI Pakistan Limited
IGI Investment Bank Limited
Indus Motor Company Limited
Invest and Finance Securities Limited
Jahangir Siddiqui and Company Limited
Javed Omer Vohra and Company Limited
JS Bank Limited
JS Income Fund
JS Investments Limited
JS Large Capital Fund
JS Value Fund
Kot Addu Power Company Limited
Lucky Cement Limited
Maple Leaf Cement Company Limited
Mari Gas Company Limited
MCB Bank Limited
MCB Dynamic Cash Fund
Meezan Balanced Fund
Meezan Bank Limited
MyBank Limited
National Bank of Pakistan
National Refinery Limited
Netsol Technologies Limited
NIB Bank Limited
Nishat Mills Limited (Chunian) Nishat Textile Mills Limited
Oil and Gas Development Company Limited
Pace Pakistan Limited
Packages Limited
Pak Oman Advantage Fund
Pak Suzuki Motor Company Limited
Pakistan Electron Limited
Pakistan Oilfields Limited
Pakistan Petroleum Limited
Pakistan Premier Fund
Pakistan Refinery Limited
Pakistan Re-Insurance Company Limited
Pakistan State Oil Company Limited
Pakistan Strategic Allocation Fund
Pakistan Telecommunication Company Limited
Pervez Ahmed Securities Limited
PICIC Growth Fund
Pioneer Cement Limited
Reliance Income Fund
Samba Bank Limited
Searle Pakistan Limited
Shell Pakistan Limited
Sitara Peroxide Limited
Soneri Bank Limited
Sui Northern Gas Pipelines Limited
Sui Southern Gas Company Limited
2009
2008
Rupees in ‘000
– 25,324 41,808 – – – 3,525 68,713 – 7,878 10,606 81,281 – 19,062 24,595 – 99,299 – 5,080 – 17,837 29,385 – 67,318 78,074 8,096 – 48,698 – 36,016 23,264 11,952 95,733 47,526 4,401 64,647 14,039 14,300 40,958 – 73,915 75,091 59,133 – 92,779 81,139 650 – 97,809 – 9,088 77,963 – 32,952 – 3,990 7,363 – 34,626 – 36,356 92,484 23,569 14
11,109
85,485
102
85
4
3,371
50,751
10,000
14,652
8,455
47,006
457
17,151
16,931
1
417
28
1,999
25,000
10
–
17
6,023
48,950
3
7
636
50,000
7,029
6,104
13,404
45,974
34,643
51
85,961
3,562
136
41,820
148
92,663
75,069
61,724
14
101,311
35,161
1,782
365
13,846
1,229
13,601
25,184
27
45,056
7
5,000
10,083
2
19,108
40
71,557
65,890
69
Paid-up value
per share/
certificate/unit
2009
– – 6,100 830,000 – 2008
62 3,641 – 310,511 2,380,000 2009
Rupees
Name of companies / mutual funds
– – 99.18 51.52 – Thatta Cement Limited
The Bank of Punjab
Tri Pak Films Limited
United Bank Limited
UTP Large Capital Fund
2008
Rupees in ‘000
– – 605 42,761 – 1
55
–
30,208
17,737
Add / (less): Surplus / (deficit) on revaluation of shares - (net)
3,889,726 87,934
3,144,638
(1,054,865)
Market value as on December 31
3,977,660
2,089,773
9.4
Particulars of investments held in unlisted companies
Cost / paid-up Percentage
Number value per
Investee
Notes
of holding
of shares
share
%
Rupees
100 13,500,000 10 Total paid-up Break up
value
value
Based on
audited
financial
statements Name of
as at
Chief Executive
Rupees in ‘000 Askari Investment Management Limited
– subsidiary
9.4.1
Askari Securities Limited – subsidiary
9.4.2
74 13,320,000 10 77,789 49,133 31 Dec 2009 Mr. Faheem Sardar
Khushhali Bank Limited
9.4.3
2.93 5,000,000 10 50,000 55,130 31 Dec 2008 Mr. M.Ghalib Nishtar
Pakistan Export Finance Guarantee Agency
Limited – a related party
9.4.4
5.26 568,044 10 5,680 135,000 155,055 31 Dec 2009 Mr. Saeed Aziz Khan
– – Mr. S.M. Zaeem
268,469
9.4.1 Askari Investment Management Limited is a wholly owned subsidiary of the Bank, licensed as a non-banking finance
company (NBFC), to undertake asset management and investment advisory services under Non Banking Finance
Companies and Notified Entities Regulations, 2007 (NBFC and NE Regulations).
9.4.2 Askari Securities Limited is a partly owned subsidiary of the Bank, incorporated under the Companies Ordinance, 1984
as a public limited company to undertake the business of share brokerage, investment advisory and consultancy
services.
9.4.3 This represents subscription by the Bank towards capital of Khushhali Bank as per the State Bank of Pakistan letter
No. BSD (RU-26/625-MfB/13317/00) dated August 07, 2000. In accordance with the restrictions imposed under
section 10 of the Khushhali Bank Ordinance, 2000, the sale/ transfer of these shares is subject to the prior approval of
the State Bank of Pakistan.
9.4.4 The difference between the paid up value and break up value of Pakistan Export Finance Guarantee Agency Limited
amounting to Rs. 5,680 thousand (2008: Rs. 3,896 thousand) is considered as impairment and has been fully provided
for.
9.5
Particulars of investments held in preference shares - Listed
No. of preference shares
2008
per share 2009
Paid-up
valueBook ValueMarket Value
10,000,000 10,000,000 Investee
Rate %
Rupees
Rupees in ‘000 Rupees in ‘000 10
Chenab Limited
2,500,000 2,500,000 10 Masood Textile Mills Limited
2009
2008
2009
2008
9.25
70,000 100,000 70,000 81,700
Average of ask side of six
month KIBOR plus 2 percent
per annum
25,000 25,000 25,000 25,000
95,000 125,000 95,000 106,700
page | 87
9.6
Investment in Term Finance Certificates
No. of certificates
Company’s Name
2009
2008
Redeemed value per certificate Rupees 2009
Rupees in ‘000
2008
Listed
13,669 35,000 30,000 11,000 27,400 8,000 37,230 – 40,000 4,600 12,000 10,000 29,000 84,090 18,669 35,000 30,000 – 5,000 8,000 15,000 43,493 40,000 4,600 12,000 10,000 24,431 6,067 Allied Bank Limited
NIB Bank Limited
Orix Leasing Limited
Pak Arab Fertilizer Limited
Pakistan Mobile Communication (Private) Limited
Royal Bank of Scotland
Soneri Bank Limited
Standard Chartered Bank Limited United Bank Limited
Worldcall Telecom Limited
4,994 4,991 4,990 2,446 4,521 4,208 4,621 – 4,993 4,991 4,991 4,993 5,656 4,780 Book value as on December 31
Unlisted
30,000 15,200 86,000 86,000 70,000 – 20,000 20,000 140,000 140,000 233,333 233,333 233,333 233,333 233,333 233,333 74,900 33,000 10,000 10,000 5,000 5,000 455,800 – 2,200 2,200 140,000 140,000 68,493 – 642,800 – 50,000 70,000 10,000 10,000 – 59,023 Avari Hotels Limited
(Chief Executive: Mr. Byram Dinshawji Avari)
Azgard Nine Limited
(Chief Executive: Mr. Ahmed H. Shaikh)
(Chief Executive: Mr. Shakil Sadiq)
Dewan Farooq Spinning Mills Limited
(Chief Executive: Mr. Dewan Abdul Baqi Farooqui)
Engro Chemicals Pakistan Limited
(Chief Executive: Mr. Asad Umar)
Faisalabad Electric Supply Company Limited
(Chief Executive: Mr. Tanwir Safder Cheema)
Gujranwala Electric Supply Company Limited
(Chief Executive: Mr. Muhammad Ibrahim Majoka)
Islamabad Electric Supply Company Limited
(Chief Executive: Mr. Raja Abdul Ghafoor)
Jahangir Siddique and Company Limited
(Chief Executive: Mr. Munaf Ibrahim)
KASB Securities Limited
(Chief Executive: Mr. Farrukh H. Sabzwari)
Kashf Foundation
(Chief Executive: Ms. Sadaffe Abid)
National Transmission and Dispatch Company Limited
(Chief Executive: Mr. Ameer-ur-Rehman)
Orix Leasing Pakistan Limited
(Chief Executive: Mr. Humayun Murad)
Pak American Fertilizers Limited (Chief Executive: Mr. Ahmed Jaudet Bilal)
(Chief Executive: Mr. Fawad Ahmad Mukhtar)
Power Holding Private Limited
(Chief Executive: Mr. Fazeel Asif)
Pakistan International Airlines Corporation Limited
(Chief Executive: Mr. Aijaz Haroon)
Shakarganj Mills Limited
(Chief Executive: Mr. Ahsan M. Saleem)
(Chief Executive: Mr. Baber Ali Syed)
68,263 174,693 149,700 26,908 123,871 33,661 172,051 – 199,720 22,959 59,892 49,930 164,030 401,978 1,647,656 1,252,367
5,000 150,000 76,000
5,002 430,194 430,387
5,000 350,000 –
1,250 25,000 25,000
5,000 700,000 700,000
5,000 1,166,665 1,166,665
5,000 1,166,665 1,166,665
5,000 1,166,665 1,166,665
4,808 360,106 165,744
5,022 50,222 50,370
2,143 10,714 25,000
5,000 2,279,000 –
100,023 220,050 220,070
4,997 699,580 699,800
4,773 326,924 –
5,000 3,214,000 –
4,999 249,950 247,907
5,000 50,000 50,000
– – Book value as on December 31
These carry rate of return ranging from 8.45% to 19.43% (2008: 8.45% to 19.43%) per annum and having maturity periods of upto 10 years
(2008: 8 years).
page | 88
93,270
174,760
149,760
–
21,121
40,548
74,985
212,990
199,800
22,968
59,916
49,950
121,988
30,311
12,615,735 295,112
6,485,385
9.7
This represents investment in Funds managed by Askari Investment Management Limited; a wholly owned subsidiary
of the Bank.
9.8
Sukuk Certificates - Available for sale
Name of Investee
Rate
Maturity
2009
Eden Builders Private Limited
House Building Finance Corporation
JDW Sugar Mills Limited
K.S. Sulmanji and Esmailiji and
Sons Private Limited
Kohat Cement Limited
Pak American Fertilizer Limited
Pak Electron Limited
Pakistan Domestic Sukuk Company Limited
Shahraj Fabric Limited
Average of offer side of
3 month KIBOR plus 2.3% p.a.
6 month KIBOR plus 1% p.a.
Weighted average yield of
6 months market treasury bills
March 8, 2014
120,000 66,250
90,000 100,000
June 20, 2014
200,000 200,000
June 28, 2012
190,000 200,000
December 13, 2012
241,500 241,500
August 5, 2015
300,000 300,000
September 28, 2012
19,789 50,530
September 26, 2011
10,000 10,000
December 31, 2012
150,000 150,000
August 19, 2013
190,000 190,000
1,511,289 1,508,280
May 8, 2014
9.9
2008
Rupees in ‘000
The Bank has invested in MENA Transformation Fund I.L.P a closed ended fund having six year term.
9.10 Investment in associate represents 15% (2008: 15%) investment in the equity of Askari General Insurance Company
Limited, a listed associated company (market value as at December 31, 2009: Rs. 51,962 thousand; 2008: Rs. 91,668
thousand).
9.11 Sukuk Certificates - Held to maturity
Name of Investee
Rate
Maturity
2009
2008
Rupees in ‘000
Arzoo Textile Limited
April 14, 2014
110,000 110,000
Educational Excellence Limited
November 19, 2013
270,000 270,000
Karachi Shipyard and Engineering Works
February 04, 2016
150,842 150,979
June 28, 2012
166,666 200,000
WAPDA
6 month KIBOR minus 0.25% p.a. July 13, 2017
200,000 200,000
897,508 930,979
9.12 This represents investments by the wholesale bank branch in credit linked notes issued by Standard Chartered Bank,
Singapore at 3 months USD LIBOR plus 3.50% per annum maturing on December 20, 2012.
page | 89
9.13 Quality of Available for Sale Securities
20092008
Rupees in ‘000
Market Value Rating Market Value Market Treasury Bills – note 9.13.1
Pakistan Investment Bonds – note 9.13.1
Fully paid up ordinary shares – note 9.13.2
ABL Income Fund
Allied Bank Limited
Arif Habib Limited
Atlas Bank Limited
Atlas Fund of Funds
Attock Cement Limited
Azgard Nine Limited
Cherat Cement Limited
Faysal Bank Limited
Habib Bank Limited
HBL Stock Fund
Honda Atlas Cars Limited
page | 90
37,693,814 4,943,072 – 68,949 – 11,607 – 275 – 64,051 157,359 111,247 113,119 104,002 1,720 36,310 12,252 90,381 29,589 56,133 45,441 – 6,218 – – 4,569 29,477 62,675 – – – – – – – 92,368 – 18,480 41,808 – – – 3,324 74,064 – 5,470 9,739 121,212 – 19,062 25,548 – 101,787 – unrated
unrated
–
AA –
unrated
–
A
–
unrated
unrated
unrated
unrated
unrated
A– unrated
unrated
unrated
AA A+ AA –
A
–
–
unrated
A+
unrated
–
–
–
–
–
–
–
AA –
unrated
unrated
–
–
–
4 - Star
AA+ –
unrated
unrated
unrated
–
A
unrated
–
AA+ –
16,028,763 2,901,990 52,083 10,193 3
– 106 226 76 21,205 114,874 100,000 100,000 – 1,660 31,750 2,046 14,645 38 10 7,745 5
1,313 7
53 1,294 13,594 1,050 10 1
26 248 30 28 20 10,905 16 4,557 28,560 107 72 4
1,489 16,424 5,798 2,649 1,808 22,731 426 4,725 6,148 1
388 22 Rating
unrated
unrated
A
AA
unrated
–
A
A
unrated
A+
unrated
unrated
unrated
–
A–
unrated
unrated
unrated
AA
A+
AA
AA
A–
unrated
unrated
unrated
A+
unrated
unrated
unrated
unrated
BB
unrated
unrated
AA
AA
unrated
unrated
unrated
unrated
AA
A–
5 - Star
AA+
unrated
unrated
unrated
unrated
unrated
A
unrated
BBB–
AA+
BB+
20092008
Rupees in ‘000
Market Value Rating Market Value JS Bank Limited
JS Income Fund
JS Value Fund
MCB Bank Limited
Meezan Bank Limited
MyBank Limited
NIB Bank Limited
Nishat (Chunian) Mills Limited
Nishat Textile Mills Limited
Packages Limited
Pakistan Export Finance Guarantee Agency Limited
Pakistan Re-Insurance Limited
PICIC Growth Fund
Samba Bank Limited
Soneri Bank Limited
Thatta Cement Limited
The Bank of Punjab
United Bank Limited
Chenab Limited
Masood Textile Mills Limited
Askari Income Fund Units – note 9.13.2
5,080 – 14,916 28,663 – 50,000 80,735 75,488 6,881 – 71,396 – 36,600 25,341 9,975 78,089 42,437 – 51,487 27,560 – 60,836 – 73,915 78,866 48,600 – – 138,463 91,003 595 – 73,080 – 7,992 73,809 – 29,374 – 3,990 5,627 – 34,975 – 36,356 62,496 23,076 – – 624 46,760 – A
–
AA– unrated
–
A– unrated
unrated
D
–
AA+ –
unrated
A+ A– AAA
AAA –
AA– unrated
–
AAA –
AA
AA–
unrated
–
–
unrated
unrated
3 - Star
–
unrated
–
4 - Star
unrated
–
2 - Star –
unrated
A
–
unrated
–
AA– AA AA– –
–
A+ AA+ –
70,000 25,000 888,667 unrated
unrated
3 - Star 1,090 25,701 11 – 27 50,000 4,418 9,710 4
7
592 51,013 2,952 4,399 7,424 17,005 10,468 47 20,081 1,330 140 24,404 119 24,357 56,464 17,411 13 1,784 9,490 18,854 311 417 5,406 1,145 3,254 17,460 14 9,485 8
4,735 3,211 2
18,890 45 22,205 26,497 62 1
48 – 11,461 5,474 81,700 25,000 921,376 Rating
A–
5 - Star
AA–
–
5 - Star
A–
unrated
unrated
BBB+
unrated
AA+
unrated
5 - Star
A+
A
AAA
AAA
unrated
AA–
unrated
A+
AAA
A+
AA
AA–
unrated
A
unrated
unrated
unrated
5 - Star
unrated
unrated
AAA
4 - Star
unrated
unrated
unrated
BBB
unrated
A
BBB
unrated
unrated
AA–
AA
AA–
unrated
AA–
–
AA+
4 - Star
unrated
unrated
5 - Star
page | 91
20092008
Rupees in ‘000
Market Value Rating Market Value Rating
Allied Bank Limited
Avari Hotels Limited
Azgard Nine Limited
Engro Chemical Pakistan Limited
Kashf Foundation
NIB Bank Limited
United Bank Limited
World Call Telecom Limited
66,145 140,730 425,853 344,550 665,216 1,166,665 1,166,665 27,311 1,166,665 376,333 49,224 10,540 2,279,000 125,659 228,147 180,565 685,864 321,373 249,950 3,214,000 44,037 61,510 387,431 AA– A– AA– AA– AA unrated unrated A+ unrated AA+ AA– A– unrated A+ AA & AA+ A+ AA– AA unrated unrated D
AA A
101,858 76,000 431,675 – 704,200 1,166,665 1,166,665 – 1,166,665 166,418 50,370 25,078 – 24,995 260,768 74,985 700,550 217,422 – – 50,000 23,943 329,998 AA–
A–
AA–
–
AA
unrated
unrated
–
unrated
AA+
AA–
A–
–
A+
AA+
AA–
AA–
AA
–
–
A–
AA
AA–
13,383,433 6,738,255
National Investment Trust (NIT) Units
Sukuk Certificates
Foreign securities
262,601 101,335 1,510, 362 3 - Star
unrated
unrated
79,705 – 1,508,280 4 - Star
–
unrated
228,191 unrated
170,040 unrated
62,119,796 29,525,724
9.13.1 These are Government of Pakistan guaranteed securities.
9.13.2 Ratings for these equity securities / units represent ‘Entity Ratings’.
9.13.3 Local securities have either been rated by ‘The Pakistan Credit Rating Agency Limited (PACRA) or ‘JCR-VIS Credit
Rating Company Limited (JCR-VIS), whereas foreign security is unrated. These ratings reflect independent credit risk
assessment by respective credit rating entities.
9.14 The Bank recognised impairment loss arising on valuation of listed equity portfolio held as available for sale on
December 31, 2008 as part of equity in terms of the options permitted by the State Bank of Pakistan’s BSD Circular
No. 4 dated February 13, 2009. The said loss amounted to Rs. 440,866 thousand as of December 31, 2008 reduced to
Rs 285,373 thousand due to price changes during 2009 and was charged to profit and loss account on a quarterly basis
during 2009, as permitted by the above referred circular. In addition, continuing with the impairment policy followed
by the Bank, an amount of Rs. 145,684 thousand has also been recognised as impairment of available for sale equity
portfolio.
page | 92
Rupees in ‘000
2009
2008
9.15 Unrealized (loss) / gain on revaluation of investments
classified as held for trading
(1,918)
22,384
9.16 Market Treasury Bills, Pakistan Investment Bonds and Federal Investment Bonds are securities eligible for rediscounting with the State Bank of Pakistan.
9.17 Investments given as collateral include securities having book value of Rs. 44,000 thousand pledged with the State
Bank of Pakistan as security against demand loan and TT / DD discounting facilities.
Rupees in ‘000
10.
Notes
2009
2008
ADVANCES
Loans, cash credits, running finances, etc.
In Pakistan
Outside Pakistan
125,995,317 2,106,040 120,029,501
2,993,878
Ijarah Financing - In Pakistan
10.2
128,101,357 1,635,158 123,023,379
2,092,884
281,514 –
Payable in Pakistan
Payable outside Pakistan
9,582,481 8,027,833 5,737,310
8,865,648
17,610,314 14,602,958
Financing in respect of continuous funding system
147,628,343 – 139,719,221
111,752
147,628,343 139,830,973
Provision against non performing advances
10.5
Specific provision
General provision
General provision against consumer financing
(11,658,161)
(585,642)
(350,041)
(10,025,157)
(573,390)
(414,184)
(12,593,844)
(11,012,731)
135,034,499 128,818,242
10.1.1 In local currency
In foreign currencies
139,014,592 8,613,751 130,774,111
9,056,862
147,628,343 139,830,973
10.1.2 Short term ( for upto one year)
Long term ( for over one year)
119,371,026 28,257,317 111,043,245
28,787,728
147,628,343 139,830,973
Net book value of assets / investments in Ijarah
under IFAS 2 in Pakistan
10.3
Bills discounted and purchased (excluding treasury bills)
Advances - gross
Advances - net of provision
10.1 Particulars of advances
page | 93
10.2 Ijarah Financing - In Pakistan
2009
2008
Not
later than
Rupees in ‘000
one year
Later than
one and less
Not
than five Over five
later than
years
years
Total
one year
Later than
one and less
than five
years
Over five
years
Total
Ijarah rentals receivable Residual value 498,190 65,374 995,460 419,405 – 1,493,650 – 484,779 651,713 6,520 1,468,852 536,621 – 2,120,565
– 543,141
Minimum lease payments Profit for future periods 563,564 124,240 1,414,865 219,031 – 1,978,429 – 343,271 658,233 222,807 2,005,473 348,015 – 2,663,706
– 570,822
Present value of minimum Ijarah payments 439,324 1,195,834 – 1,635,158 435,426 1,657,458 – 2,092,884
10.3 Net book Value of assets / investments in Ijarah under IFAS 2
2009
2008
Not
later than
Rupees in ‘000
one year
Later than
one and less
Not
than five Over five
later than
years
years
Total
one year
Later than
one and less
than five
years
Over five
years
Total
Assets acquired under Ijarah
Accumulated depreciation on Ijarah
– – 320,088 38,574 – – 320,088 38,574 – – – – – – –
–
Net assets / investment in Ijarah
– 281,514 – 281,514 – – – –
10.4 Advances include Rs. 17,725,451 thousand (2008: Rs. 11,689,417 thousand) which have been placed under nonperforming status as detailed below:
Category of classification
2009
Classified Advances
Domestic Overseas Provision Required
Total Domestic Other Assets Especially
Mentioned – note 10.4.1
Substandard
Doubtful
Loss
Overseas Provision Held
Total Domestic Overseas Total
Rupees in ‘000
73,966 639,784 3,490,038 13,521,663 –
–
–
–
73,966 – 639,784 155,630 3,490,038 688,926 13,521,663 10,813,605 17,725,451 – 17,725,451 11,658,161 –
–
–
–
– – 155,630 155,630 688,926 688,926 10,813,605 10,813,605 – 11,658,161 11,658,161 –
– 155,630
– 688,926
– 10,813,605
– 11,658,161
10.4.1 This represents classification made for agricultural finances.
10.5 Particulars of provision against
non-performing advances
2009
2008
Consumer
Consumer
financing
financing
Rupees in ‘000
Specific
General
-General
Total
Specific
General
-General
Opening balance
10,025,157 573,390 414,184 11,012,731 Charge for the year
Reversal for the year
3,639,565 (1,263,297)
221,248 (208,996)
Net charge / (reversal) for the year
Amounts written off – note 10.7
2,376,268 (743,264)
Closing balance
11,658,161 12,252 – 585,642 6,528,040 Total
434,690 445,875 2,146 3,862,959 5,450,215 (66,289) (1,538,582) (1,732,446)
138,700 – 4,993 5,593,908
(36,684) (1,769,130)
(64,143) 2,324,377 – (743,264)
138,700 – (31,691) 3,824,778
– (220,652)
573,390 414,184 11,012,731
3,717,769 (220,652)
350,041 12,593,844 10,025,157 7,408,605
10.5.1 The State Bank of Pakistan has amended the Prudential Regulations vide BSD Circular No. 10 of 2009 dated October
20, 2009 in relation to provision for loans and advances, thereby allowing benefit of 40% of Forced Sale Value (FSV) of
pledged stocks, mortgaged residential, commercial and industrial properties (land and building only) held as collateral
against non-performing advances. The FSV benefit has resulted in reduced charge for specific provision for the year
by Rs. 2,814,106 thousand. The FSV benefit recognised in these financial statements is not available for payment of
page | 94
cash or stock dividend. Had the FSV benefit not recognised, profit before tax for the year and profit after tax for the
year would have been lower by Rs. 2,814,106 (2008: 685,843) thousand and Rs. 1,829,169 (2008: 445,800) thousand
respectively.
10.5.2 The general provision is maintained at the rate of 0.5% on advances other than non-performing advances and
consumer financing.
2009
2008
Consumer
Consumer
financing
financing
Rupees in ‘000
Specific
General
-General
Total
Specific
General
-General
In local currency In foreign currencies
Total
11,448,001 210,160 544,082 41,560 350,041 12,342,124 – 251,720 9,927,604 97,553 529,336 44,054 414,184 10,871,124
– 141,607
11,658,161 585,642 350,041 12,593,844 10,025,157 573,390 414,184 11,012,731
Rupees in ‘000
2009
2008
10.7 Particulars of write-offs:
10.7.1 Against provisions
Directly charged to profit and loss account
743,264 – 220,652
247,311
743,264 467,963
10.7.2 Write offs of Rs. 500,000 and above
Write offs of below Rs. 500,000
742,967 297 467,963
–
743,264 467,963
10.8 In terms of sub-section (3) of Section 33A of the Banking Companies Ordinance, 1962 the statement in respect of
written off loans or any other financial relief of Rs. 500,000 or above allowed to a person(s) during the year ended
December 31, 2009 is given at Annexure-I.
Rupees in ‘000
2009
2008
10.9 Particulars of loans and advances to directors, associated companies etc.
Debts due by directors, executives or officers of the Bank or any of them either severally or jointly with any other persons
Balance at beginning of year Loans granted during the year Repayments 401,575 385,579 (179,471)
195,967
298,558
(92,950)
Balance at end of year 607,683 401,575
Debts due by companies or firms in which the directors of the
Bank are interested as directors, partners or in the case of
private companies as members
Balance at beginning of year Loans granted during the year Repayments – – – –
–
–
Balance at end of year – –
Debts due by subsidiary companies, controlled firms,
managed modarabas and other related parties
193,454
500,000
(61,550)
1,187,923 1,033,479
page | 95
Rupees in ‘000
11.
OPERATING FIXED ASSETS
Property and equipment
Notes
2009
11.1
11.2
2008
1,489,066 8,357,374 1,237,010
7,029,448
9,846,440 8,266,458
11.1 Capital work-in-progress Civil works
Advances to suppliers and contractors
– 1,489,066 –
1,237,010
1,489,066 1,237,010
11.2 Property and equipment
2009
COSTDEPRECIATION
as at as at as at Charge
as at January 1, Revaluation Transfers/ December January 1, for the
on December Rupees in ‘000
2009
Additions
Surplus (deletions)
31, 2009
2009
year (deletions)
31, 2009
Book value
as at
Annual
December
rate of
31, 2009 depreciation
1,867,512 2,098,844 700,734 1,100,541 730,610 309,804 6,050 549,158 883,303 49,033 61,785 Land –freehold
Land –leasehold
Buildings on freehold land
Buildings on leasehold land
Renovation of leased premises
Furniture, fixtures and office equipment
Carpets
Machine and equipments
Computer equipments
Vehicles
Other assets
1,414,802 2,098,844 583,199 1,414,220 946,341 387,220 18,485 924,436 959,223 222,257 131,411 452,710 – 332,485 – 416,491 71,429 1,849 168,385 532,693 5,690 1,811 9,100,438 1,983,543 –
–
–
–
–
–
–
–
–
–
–
– – – – – (26,938)
(4,105)
(505)
(14,296)
(4,198)
(18,986)
– 1,867,512 2,098,844 915,684 1,414,220 1,335,894 454,544 19,829 1,078,525 1,487,718 208,961 133,222 – – 181,819 255,758 433,346 114,462 11,779 414,618 457,719 149,059 52,430 (69,028) 11,014,953 2,070,990 – – 33,131 57,921 198,024 32,163 2,357 125,867 149,593 27,895 19,007 – – – – (26,086)
(1,885)
(357)
(11,118)
(2,897)
(17,026)
– – – 214,950 313,679 605,284 144,740 13,779 529,367 604,415 159,928 71,437 645,958 (59,369) 2,657,579 8,357,374 –
–
5
5
20
10
20
20
20
20
20
2008
COSTDEPRECIATION
2008
Additions
Surplus (deletions)
31, 2008
2008
year (deletions)
31, 2008
Book value
as at
Annual
December
rate of
Land –freehold
404,943 10,809 999,050 – 1,414,802 – – Land –leasehold
465,970 956,829 859,106 (183,061) 2,098,844 – – Buildings on freehold land
570,103 13,096 – – 583,199 160,782 21,037 Buildings on leasehold land
796,861 434,298 – 183,061 1,414,220 163,080 92,678 Renovation of leased premises
606,617 367,935 – (28,211) 946,341 330,239 116,802 Furniture, fixtures and office equipment
292,022 111,528 – (16,330) 387,220 94,785 25,787 Carpets
15,686 3,156 – (357)
18,485 10,072 2,003 Machine and equipments
647,008 308,587 – (31,159) 924,436 334,113 100,021 Computer equipments
734,191 254,898 – (29,866) 959,223 376,056 100,570 Vehicles
476,400 35,836 – (12,517) 222,257 166,155 45,840 (277,462) * Other assets
56,565 74,846 – – 131,411 46,105 6,325 – – – – (13,695)
(6,110)
(296)
(19,516)
(18,907)
(6,951)
(55,985) *
– 1,414,802 2,098,844 401,380 1,158,462 512,995 272,758 6,706 509,818 501,504 73,198 –
–
5
5
20
10
20
20
20
20
78,981 20
5,066,366 2,571,818 1,858,156 (65,475) 2,070,990 7,029,448 (55,985) *
(118,440) 9,100,438 1,681,387 511,063 (277,462) * – – 181,819 255,758 433,346 114,462 11,779 414,618 457,719 149,059 52,430 11.2.1 Cost of fully depreciated property and equipment still in use is Rs. 206,422 thousand (2008: Rs. 176,193 thousand).
11.2.2 The Bank’s freehold and leasehold land was revalued by valuers approved by Pakistan Banks Association at December
31, 2008 on the basis of their professional assessment of the present market value. The revaluation resulted in a net
surplus of Rs. 1,858,156 thousand over book value which was incorporated in the books of account of the Bank during
2008.
page | 96
11.3 Detail of disposals of operating fixed assets
Particulars of assets Original Accumulated
cost depreciation
Book
value
Sale proceeds
Mode of
disposal
Particulars of buyer
Rupees in ‘000
Toyota Corolla
969 452 517 547 As per Bank policy Mr. Mian Shamim Ahmed – Executive
Honda Civic
1,515 328 1,187 1,187 -do-
Mr. Mansoor Akbar – Contractual Ex- Executive
Suzuki Cultus
640 384 256 450 Insurance claim
Askari General Insurance Company Limited
– a related party
2,206 1,697 509 509 -do-
-do
Computer equipments
655 177 478 478 -do-
-do
Furniture and Fixtures
641 89 552 552 -do-
-do
Generator
1,010 795 215 240 Trade in
Power Vision, Lahore – Engineers and Consultants
Data Card Machine
3,639 3,334 305 640 -do-
Crest Corporation, Karachi
780 442 338 31 -do-
Muhammad Aslam Brothers, Okara
3,133 3,131 2
150 Tender
Unique Wood Works, Rawalpindi
Other assets having book value
of less than Rs. 250,000/- or
cost of less than Rs. 1,000,000/ other than vehicles sold to
Bank’s executives / related party
15,188 10,829 4,359 4,784 53,840 48,540 5,300 8,558 2009
69,028 59,369 9,659 13,342 2008
118,440 65,475 52,965 48,976
Rupees in ‘000
Notes
2009
2008
12.
OTHER ASSETS
Income / mark-up accrued in local currency
12.1
Income / mark-up accrued in foreign currencies
Advances, deposits, advance rent and other prepayments
Advance taxation (payments less provisions)
Un-realized gain on forward foreign exchange contracts - net
Suspense account
Stationary and stamps in hand
Dividend receivable
Others 6,379,680 142,876 899,105 1,977,943 125,967 16,816 53,064 25,599 415,720 5,154,173
148,122
1,423,635
1,929,441
–
15,770
52,996
17,945
222,857
Less: Provision against other assets
12.2
10,036,770 (459)
8,964,939
(459)
10,036,311 8,964,480
Other assets - net of provision
12.1 This balance has been arrived at after adjusting interest in suspense of R
s 3,361,765 thousand (2008: Rs. 2,176,886
thousand).
Rupees in ‘000
Notes
2009
2008
12.2 Provision against other assets
Opening balance
Charge for the year
Reversals
Amount written-off
459 – – – –
459
–
–
Closing balance
459 459
page | 97
Rupees in ‘000
Notes
13.
BILLS PAYABLE
In Pakistan
14.
BORROWINGS
2009
2008
2,945,670 2,584,828
In Pakistan
Outside Pakistan
19,143,378 156,785 15,189,514
634
19,300,163 15,190,148
In local currency
19,143,378 156,785 15,189,514
634
19,300,163 15,190,148
14.1 Particulars of borrowings with respect to currencies
14.2 Details of borrowings - secured / unsecured
In Pakistan - local currency
Secured
Borrowings from the State Bank of Pakistan:
Export refinance scheme
Long term financing of export oriented projects
Repurchase agreement borrowings (repo)
14.2.1
14.2.2
14.2.3
11,920,153 1,780,058 4,473,167 12,090,551
1,811,653
767,310
14.2.4
970,000 520,000
19,143,378 15,189,514
Outside Pakistan - foreign currencies
Overdrawn nostro accounts - unsecured
156,785 634
19,300,163 15,190,148
Unsecured
Call borrowings
14.2.1 This facility is secured against demand promissory note executed in favour of the State Bank of Pakistan. The effective
mark-up rate is 6.5% (2008: 6.5%) per annum payable on a quarterly basis.
14.2.2 These carry mark-up rate of 5% (2008: 5%) per annum payable on a quarterly basis.
14.2.3 These are secured against pledge of Government Securities, and carry mark-up ranging from 11.65% to 12.02% (2008:
9.5% to 12.5%) per annum and have maturities upto 3 (2008: 3) months.
14.2.4 These represent borrowings at mark-up rates ranging from 11.5% to 12.60% (2008: 14.5% to 15.25%) per annum and
have maturities upto 3 (2008: 1) months.
Rupees in ‘000
15.
2009
2008
DEPOSITS AND OTHER ACCOUNTS
Customers
Fixed deposits
Saving deposits
Current accounts - non-remunerative
Special exporters’ account
Margin accounts
Others Financial institutions
Remunerative deposits
Non-Remunerative deposits
page | 98
47,689,401 110,297,787 44,340,561 21,743 1,853,597 268,063 39,675,699
80,428,214
43,245,593
30,562
1,983,653
257,099
1,494,658 4,417 2,047,388
8,364
205,970,227 167,676,572
Rupees in ‘000
2009
2008
15.1 Particulars of deposits
In local currency
174,277,597 31,692,630 141,885,129
25,791,443
205,970,227 167,676,572
Deposits include Rs. 6,464,595 thousand (2008: Rs. 1,791,611 thousand) due to related parties.
Rupees in ‘000
2009
2008
16.
SUB-ORDINATED LOANS
Term Finance Certificates – I
Term Finance Certificates – II
Term Finance Certificates – III
1,497,300 1,497,600 3,000,000 1,497,900
1,498,200
–
5,994,900 2,996,100
The Bank has raised unsecured sub-ordinated loans in three separate Term Finance Certificates issued to improve the
Bank’s capital adequacy. The salient features of the issue are as follows:
Term Finance Certificate - I Term Finance Certificate - II Term Finance Certificate - III
Outstanding amount Rupees in thousand
1,497,300 1,497,600 3,000,000
Issue date
February 4, 2005
October 31, 2005
November 18, 2009
Total issue
Rupees 1,500 million
Rating
AA–
AA–
AA–
Lahore Stock Exchange (Guarantee) Limited
Lahore Stock Exchange
(Guarantee) Limited
Listing
Rate
Payable six monthly - Base Payable six monthly - Base Rate plus 1.5%
Rate plus 1.5%
Payable six monthly - Base
Rate plus 2.5%
(after 5 years: 2.95%)
Base Rate is the simple average
of the ask rate of six month KIBOR
prevailing on the base rate
setting date.
setting date.
setting date.
8 Years
8 Years
10 Years
Repayment
Call option
–
–
Exerciseable after 60 months
from the date of issue subject
to approval by the SBP.
Redemption
6-96th month: 0.32%
97-120th month: 99.68%
6-90th month: 0.3%
96th month: 99.7%
6-90th month: 0.3%
96th month: 99.7%
Rupees in ‘000
17.
2009
2008
DEFERRED TAX LIABILITIES
Deferred credits/ (debits) arising due to:
Accelerated tax depreciation
– excess of 1% of total advances – classified in sub-standard category
Tax loss for the year
658,636 603,937
(275,021)
(21,812)
– –
–
(94,656)
Deficit on revaluation of available for sale securities
361,803 (27,878)
509,281
(496,294)
333,925 12,987
page | 99
Rupees in ‘000
18.
OTHER LIABILITIES
Mark-up / return / interest payable in local currency
Mark-up / return / interest payable in foreign currencies
Unearned income / commission
Accrued expenses
Advance payments
Security deposit against Ijarah financing
Unclaimed dividends
Branch adjustment account
Payable against purchase of listed shares
Withholding taxes payable
Federal excise duty payable
Un-realized loss on forward foreign exchange contracts - net
Workers’ Welfare Fund
Others (Withholding tax payable etc.)
19.
2009
2008
1,698,122 53,960 165,858 407,187 223,682 598,215 37,202 990,844 75,935 27,442 26,385 – 33,515 495,142 1,559,920
92,209
203,750
193,024
119,877
577,965
38,027
1,253,935
7,216
26,496
3,848
347,258
–
335,615
4,833,489 4,759,140
12,000,000 7,000,000
675,000 675,000
4,398,467 3,383,774
5,073,467 4,058,774
SHARE CAPITAL
19.1 Authorized capital
2009
Number of shares
1,200,000,000 2008
700,000,000 Ordinary shares of Rs. 10 each 19.2 Issued, subscribed and paid up
Number of shares
Ordinary shares of Rs. 10 each:
67,500,000
67,500,000
Fully Paid in cash 439,846,635
338,377,308
507,346,635
405,877,308 Issued as bonus shares 19.3 Capital Risk Management
The Bank’s objectives when managing capital are to safeguard the Bank’s ability to continue as a going concern in
order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Bank may adjust the
amount of dividend paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce
debt.
In terms of BSD circular No. 7 of 2009 issued by the State Bank of Pakistan, the Bank is required to enhance its existing
paid up capital to Rs. 10 billion (net of losses) to be achieved in phased manner as follows:
Minimum paid up capital (net of losses)
By December 31, 2009
The required minimum capital requirement can be achieved by the Bank either by fresh capital injection or retention
of profits. The stock dividend declared after meeting all the legal and regulatory requirements, and duly disclosed in
the annual audited financial statements will be counted towards the required paid up capital of the Bank pending
completion of the formalities for issuance of bonus shares. The Bank intends to meet this requirement by way of
bonus issue subsequent to balance sheet date, in this year.
page | 100
Rs 6 billion
Rs 7 billion
Rs 8 billion
Rs 9 billion
Rs 10 billion
Rupees in ‘000
Statutory
Reserve
Revenue
Reserves
2009
2008
20.
RESERVES
Balance as at January 01
Transfer from profit and loss account
Bonus shares issued
2,912,711 221,559 – 4,754,430 308,980 (1,014,693)
7,667,141 530,539 (1,014,693)
6,948,336
718,805
–
Balance as at December 31
3,134,270 4,048,717 7,182,987 7,667,141
20.1 Reserves as at December 31, 2009 include Rs. 2,241,958 thousand (2008: Rs. 445,798 thousand) in respect of net of tax
benefit of 40% (2008: 30%) of Forced Sale Value (FSV) of pledged stocks, mortgaged commercial, industrial properties
(land and building only) held as collateral against non-performing advances allowed under BSD circular No 10 of 2009
dated October 20, 2009 and referred in note 10.5.1 above. Reserves to that extent are not available for payment of cash
or stock dividend in terms of above referred circular.
Rupees in ‘000
2009
2008
21.
SURPLUS ON REVALUATION OF ASSETS
Surplus on revaluation of land
(Deficit) / surplus on revaluation of available for sale securities
1,858,156 1,858,156
i) Federal Government securities
ii) Listed shares
iii) Other securities
(88,010)
89,852 (81,492)
(242,800)
(1,077,249)
(97,933)
Less: related deferred tax effect
(79,650)
27,878 (1,417,982)
496,294
(51,772)
(921,688)
1,806,384 936,468
i) Government
ii) Others 2,755,086 6,862,016 3,577,163
7,832,474
9,617,102 11,409,637
12,354 7,545
i) Government
ii) Banks and other financial institutions
iii) Others
56,911,331 1,083,718 10,404,884 61,883,864
942,566
12,580,856
68,399,933 75,407,286
68,412,287 75,414,831
22.3 Trade-related contingent liabilities 25,410,721 31,333,855
3,134,363 4,215,064
22.
CONTINGENCIES AND COMMITMENTS
22.1 Direct credit substitutes
22.2 Transaction-related contingent liabilities
Money for which the Bank is contingently liable:
a) Contingent liability in respect of guarantees given on behalf
of directors or officers or any of them (severally or jointly)
with any other person, subsidiaries and associated undertakings. b) Contingent liability in respect of guarantees given, favouring:
22.4 Other contingencies
These represent certain claims by third parties against the Bank, which
are being contested in the Courts of law. The management is of the view
that these relate to the normal course of business and are not likely to
result in any liability against the Bank.
page | 101
22.5 Tax contingencies
i)
For tax assessments carried out to date, tax demands of approximately Rs. 3,340 million and Rs. 53 million, raised
by the tax authorities, relate to provision against Non Performing Loans (NPLs) and diminution in the value of
investments respectively are under litigation. The Income Tax Appellate Tribunal (ITAT) upto Tax Year 2006 has
decided appeals in favour of the Bank on the issue of provisions against NPLs, while tax demand for provision
for diminution in value of investment has been set aside for all relevant years. The income tax department
has filed reference applications before the High Court on the above issues which has not yet been admitted for
regular hearing. Based on advice from tax advisors, the management is hopeful that the High Court will uphold the
decisions of Appellate Authorities.
For Tax year 2008 and 2009 the appeals are pending before ITAT and the Commissioner Income Tax (CIT) (Appeals)
respectively.
Notwithstanding the above, should these contingencies materialize at a later stage, these will give rise to a deferred
tax debit being a timing difference in nature, as the Bank will not be required to pay tax on future realization, if any,
of these receivables.
The department issued re-amended assessment orders for tax years 2005 to 2008 on the issue of taxing
commission and brokerage income at normal tax rate instead of under the presumptive tax regime and allocation
of expenditure to dividend / capital gains, raising tax demand of Rs. 582 million approximately. Such issues
however have been decided in the Bank’s favour by the CIT (Appeals) for the Tax Year 2008 except on the issue of
allocation of financial expenses. The Bank has filed appeals against the orders before the ITAT in respect of Tax
years 2005 to 2008. Based on advice from tax consultants, the management is hopeful that the issues in appeals
will be ultimately decided in the Bank’s favour.
ii)
Rupees in ‘000
2009
2008
22.6 Commitments in respect of forward lending
Commitments against “REPO” transactions
Purchase and resale agreements
3,922,616 4,493,702 2,571,940
795,391
–
–
–
153,126
Purchase
Sale
24,552,607 17,646,611 15,722,257
10,319,270
22.9 Commitments for the acquisition of operating fixed assets
462,763 280,440
22.7 Commitments in respect of forward purchase /
sale of listed equity securities
Purchase
Sale
22.8 Commitments in respect of forward exchange contracts
22.10 Commitments to extend credit
The Bank makes commitments to extend credit in the normal course of its business but these being revocable
commitments do not attract any significant penalty or expense if the facility is unilaterally withdrawn except for
Rs 2,332,650 thousand (2008: 1,354,550 thousand).
Rupees in ‘000
2009
2008
22.11 Bills for collection
Payable in Pakistan
5,626,908 10,673,130 3,722,886
12,300,025
16,300,038 16,022,911
Bills for collection represent bills drawn in favour of various financial institutions in Pakistan and abroad on behalf of
Bank’s customers. These are accepted by the Bank as an agent and the Bank does not carry any credit risk in respect
of these bills.
page | 102
23.
Off balance sheet financial instruments
Off balance sheet financial instruments referred to as derivatives are contracts the characteristics of which are derived
from those of underlying assets. These include forwards and swaps in money and foreign exchange markets. The
Bank’s exposure in these instruments represents forward foreign exchange contracts, on behalf of customers in
imports and exports transactions, forward sales and forward purchases on behalf of customers in the inter-bank
money market and with the State Bank of Pakistan. The Bank also enters into repo transactions against Government
Securities carrying fixed interest rates and having fixed contractual maturities. The risks associated with forward
exchange contracts are managed by matching the maturities and fixing counter parties’ intra-day and overnight limits.
In addition, these also come under the State Bank of Pakistan’s net open position limits. The credit risk associated with
repo transactions is secured through underlying Government Securities.
24.
DERIVATIVE INSTRUMENTS
The Bank does not deal in derivative instruments.
Rupees in ‘000
Note
25.
MARK-UP / RETURN / INTEREST EARNED
On loans and advances to:
i) Customers
25.1
ii) Financial institutions
2009
2008
16,650,120 76,194 13,871,412
70,736
On investments
i) Available for sale securities
ii) Held to maturity securities
4,840,476 471,026 3,148,301
487,423
On deposits with financial institutions
On securities purchased under resale agreements
155,224 468,714 453,092
362,349
22,661,754 18,393,313
25.1 This includes an amount of Rs. 162,389 thousand (2008: Rs. 49,295 thousand) on account of income received from
related parties.
Rupees in ‘000
Note
2009
2008
26.
MARK-UP / RETURN / INTEREST EXPENSED
On deposits
On securities sold under repurchase agreements
On sub-ordinated loans
On other short term borrowings
11,569,560 501,514 559,984 998,038 8,528,319
730,393
383,785
1,008,222
13,629,096 10,650,719
62,177 14,336 (856)
47,015 21,045 266
1,091
–
6,682
28,704
143,717 36,743
32,114 3,683 12,506 355,918 30,537
(3,989)
11,855
304,753
404,221 343,156
27.
GAIN ON SALE OF INVESTMENTS - NET
Market Treasury Bills Pakistan Investment Bonds Term Finance Certificates Shares - Listed Others
28.
OTHER INCOME
Rent on property
28.1
Net profit / (loss) on sale of property and equipment
Rent of lockers
Recovery of expenses from customers
28.1 This includes an amount of Rs. 19,992 thousand (2008: Rs. 24,217 thousand) on account of rent received from related
parties.
page | 103
Rupees in ‘000
29.
Notes
2009
2008
ADMINISTRATIVE EXPENSES
Salaries, allowances, etc. Charge for defined benefit plan
35.3
Contribution to defined contribution plan Non-executive directors’ fees, allowances and other expenses
Rent, taxes, insurance, electricity, etc.
Legal and professional charges
Brokerage and commission
Communications
Repairs and maintenance
Stationery and printing
Advertisement and publicity
Donations
Auditors’ remuneration
29.1
Depreciation
11.2
Other expenditure (traveling, security services, vehicle
running expenses, etc.)
3,521,162 136,153 107,882 655 817,629 70,412 127,828 299,713 300,588 114,969 71,492 18,000 7,500 645,958 2,959,447
109,116
101,208
755
661,968
33,561
141,021
260,808
164,183
104,381
152,793
–
5,107
511,063
755,916 698,758
6,995,857 5,904,169
Audit fee Fee for the audit of provident and gratuity funds
Special certifications, half year review
and the audit of consolidated financial statements
Out-of-pocket expenses
2,500 80 2,200
70
4,401 519 2,312
525
7,500 5,107
29.1 Auditors’ remuneration
30.
OTHER CHARGES
Penalties imposed by the State Bank of Pakistan 33,515 853 –
10,987
34,368 10,987
562,099 (27,651)
17,363
107,794
31.
TAXATION
For the year
Current
Deferred
For prior years
Current
Deferred
534,448 125,157
119,827 (119,827)
(50,000)
–
–
(50,000)
534,448 75,157
31.1 Relationship between tax expense and accounting profit
Profit before taxation 1,642,241 461,382
Tax at applicable tax rate of 35 percent (2008: 35 percent)
Effect of:
– Income chargeable to tax at lower rates
– Prior years’ adjustment
– Amounts not deductible for tax purposes
– Others
574,784 161,484
(40,634)
–
298 – (43,405)
(50,000)
3,845
3,233
534,448 75,157
page | 104
Rupees in ‘000
2009
2008
32.
BASIC / DILUTED EARNINGS PER SHARE
Profit for the year - Rupees in ‘000
1,107,793 386,225
Weighted average number of Ordinary Shares - numbers
507,346,635 507,346,635
Basic / diluted earnings per share - Rupees 2.18 0.76
There is no dilutive effect on the basic earnings per share of the Bank.
Weighted average number of ordinary shares for 2008 has been restated to give effect of bonus shares issued during
the year.
Rupees in ‘000
2009
2008
33.
CASH AND CASH EQUIVALENTS
Call money lendings
19,385,843 8,364,261 100,000 16,029,635
3,954,814
675,000
27,850,104 20,659,449
34.
STAFF STRENGTHNumber of employees
Permanent Temporary / on contractual basis Daily wagers Commission based 4,393 1,646 –
120 4,252
1,703
–
541
Bank’s own staff strength at the end of the year Outsourced 6,159 1,111 6,496
1,064
Total staff strength at the end of the year 7,270 7,560
35.
DEFINED BENEFIT PLAN
35.1 General description
accordance with the actuarial recommendation.
The benefits under the gratuity scheme are payable on retirement at the age of 60 years or earlier cessation of service
in lump sum. The benefit is equal to one month’s last drawn basic salary for each year of eligible service or part
thereof.
Rupees in ‘000
2009
2008
35.2 The amounts recognised in the balance sheet are as follows:
Present value of defined benefit obligation
Fair value of plan assets
700,384 (481,384)
538,472
(326,881)
Unrecognised actuarial losses
219,000 (219,000)
211,591
(211,591)
–
–
Current service cost
Interest on obligation
Expected return on plan assets
Actuarial loss recognised
84,696 80,771 (49,032)
19,718 73,810
43,835
(24,804)
16,275
136,153 109,116
35.4 Actual return on plan assets
48,564 (2,925)
Net liability
35.3 The amounts recognised in profit and loss account are as follows:
page | 105
Rupees in ‘000
2009
2008
35.5 Changes in the present value of defined benefit obligation
Opening defined benefit obligation
Interest cost
Actuarial loss
Benefits paid
538,472 84,696 80,771 26,659 (30,214)
438,354
73,810
43,835
9,796
(27,323)
Closing defined benefit obligation
700,384 538,472
35.6 Changes in fair value of plan assets
Opening fair value of plan assets
Expected return
Actuarial losses
Contributions by employer
Benefits paid
326,881 49,032 (468)
136,153 (30,214)
248,040
24,804
(27,756)
109,116
(27,323)
Closing fair value of plan assets
481,384 326,881
The Bank expects to contribute Rs. 146,551 thousand to its defined benefit gratuity plan in 2010.
The expected return on plan assets is based on the market expectations and depends upon the asset portfolio of the
Bank, at the beginning of the period, for returns over the entire life of the related obligation.
2009
2008
Rupees ‘000
Percentage
Rupees ‘000
Percentage
35.7 Break-up of category of assets
Defense saving certificates
Bank deposit account
–
317,047 164,337 –
66
34
57,452 153,808 115,621 18
47
35
481,384 100
326,881 100
35.8 Principal actuarial assumptions
The actuarial valuation was carried out for the year ended December 31, 2009 using “Projected Unit Credit Method”.
The main assumptions used for actuarial valuation are as follows:
2009
Discount rate - per annum
Expected rate of increase in salaries - per annum
Expected rate of return on plan assets - per annum
Average expected remaining life of employees - years
13%
13%
13%
8
2008
15%
15%
15%
9
35.9 Amounts for current and previous four annual periods are as follows:
Rupees in ‘000
2009
2008
2007
2006
2005
As at December 31,
Defined benefit obligation
Plan assets
700,384 (481,384)
538,472 (326,881)
438,354 (248,040)
266,173 (212,931)
199,511
(182,281)
Deficit
219,000 211,591 190,314 53,242 17,230
Experience adjustments
Actuarial loss on obligation (26,659)
(9,796)
(132,987)
(35,523)
(7,992)
Actuarial loss on plan assets
(468)
(27,756)
(6,747)
(489)
(3,707)
page | 106
36.
DEFINED CONTRIBUTION PLAN
contributions are made both by the Bank and by the employees to the fund at the rate of 8.33% of basic salary of the
employee.
37.
COMPENSATED ABSENCES
The Bank grants compensated absences to all its regular employees as per effective Service Rules. Provisions are
made in accordance with the actuarial recommendation.
Under this unfunded scheme, regular employees are entitled to 30 days privilege leave for each completed year of
service. Unutilized privilege leave are accumulated upto a maximum of 120 days which could be encashed at any time
of retirement or can also be encashed during service. These are encashable on the basis of last drawn gross salary.
Present value of obligation as at December 31, 2009 was Rs. 149,442 thousand against related liability of Rs. 115,571
thousand carried at December 31, 2008. Expense for the year of Rs. 33,871 thousand has been included under
administrative expenses. The main assumptions used for actuarial valuation are as follows:
Leave accumulation factor - days
38.
COMPENSATION OF DIRECTORS AND EXECUTIVES
Rupees in ‘000
Fees Managerial remuneration
Charge for defined benefit plan
Contribution to defined contribution plan
Rent and house maintenance
Utilities
Medical
Special performance incentive / Bonus
2009
2008
13%
13%
5
President / Chief Executive
15%
15%
5
Directors 2009
Executives
2009
2008
2008
2009
2008
105 9,240 770 770 4,158 924 1,630 1,540 110 6,000 7,390 1,065 2,700 600 600 1,750 655 – – – – – – – 755 – – –
– – – – – 453,026 37,752 37,737 203,862 45,303 47,371 75,314 –
423,121
55,144
67,517
190,404
42,312
42,312
87,719
19,137 20,215 655 755 900,365 908,529
1
2
10 10 472 464
Number of persons
Executives mean employees, other than the chief executive and directors, whose basic salary exceeds five hundred
thousand rupees in a financial year. Chief Executive is also provided with Bank maintained car.
page | 107
39.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Rupees in ‘000 2009
2008
Book value Fair value Book value Fair value
19,385,843 8,364,261 4,614,059 67,046,033 19,385,843 8,364,261 4,614,059 67,046,033 16,029,635 3,954,814 4,479,754 35,677,755 16,029,635
3,954,814
4,479,754
35,677,755
51,327,955 5,383,512 78,323,032 10,036,311 51,327,955 5,383,512 78,323,032 10,036,311 35,825,637 3,159,605 89,833,000 8,964,480 35,825,637
3,159,605
89,833,000
8,964,480
244,481,006 244,481,006 197,924,680 197,924,680
39.1 On-balance sheet financial instruments
Assets
Investments
Advances
Term loans
Staff advances
Other advances
Other assets
Liabilities
Bills payable
Borrowings
Current and saving accounts
Term deposits
Sub-ordinated loans
Other liabilities
2,945,670 19,300,163 2,945,670 19,300,163 2,584,828 15,190,148 2,584,828
15,190,148
158,280,826 47,689,401 5,994,900 –
4,833,489 158,280,826 47,689,401 5,994,900 –
4,833,489 128,000,873 39,675,699 2,996,100 –
4,759,140 128,000,873
39,675,699
2,996,100
–
4,759,140
239,044,449 239,044,449 193,206,788 193,206,788
24,552,607 24,552,607 15,722,257 15,722,257
39.2 Off-balance sheet financial instruments
Forward purchase of foreign exchange
4,493,702 4,493,702 795,391 795,391
Forward sale of foreign exchange
17,646,611 17,646,611 10,319,270 10,319,270
3,922,616 3,922,616 2,571,940 2,571,940
The fair value of investments is based on quoted market prices and rates quoted at Reuters Pages (PKRV) with the
exception of unlisted securities, held to maturity securities and National Prize Bonds.
Fair value of remaining financial assets and liabilities except fixed term loans, staff loans, non-performing advances
and fixed term deposits is not significantly different from the carrying amounts since assets and liabilities are either
short term in nature or in the case of customer loans and deposits are frequently repriced.
Fair value of fixed term loans, staff loans, non-performing advances and fixed term deposits cannot be calculated
with sufficient reliability due to absence of current and active market for such assets and reliable data regarding
market rates for similar instruments. The provision for non-performing advances has been calculated in accordance
with the Bank’s accounting policy as stated in note 5.4. The maturity profile and effective rates are stated in
note 44.2.4.
page | 108
40.
Segment details with respect to Business Activities
The segment analysis with respect to business activity is as follows:
Rupees in ‘000 Corporate Finance 129,671 36,152 93,519 68,705 – – 792 0.06%
0.02%
Trading and Sales Retail Banking Commercial Banking 222,299 2,863,833 61,976 734,280 160,323 2,129,553 232,274 18,285,963 – 2,641,129 – 2,473,403 2,680 9,132,424 0.10%
1.24%
0.03%
0.34%
21,903,274 22,154,673 (251,399)
248,446,567 15,084,322 10,284,254 224,073,329 9.51%
10.24%
2009
Payment and
Settlement
Assets
Management
Retail
Brokerage
Sub-Ordinated
Loans
Total income Total expenses
Net income (loss)
Segment Assets (Gross)
Segment Non Performing Loans
Segment Provision Required
Segment Liabilities
Segment Return on net Assets (ROA) (%)
Segment Cost of funds (%)
Net income (loss)
Segment Liabilities
Assumptions used:
–
Administrative expenses have been allocated to segments based on respective segment income.
–
Unallocatable assets representing 4.99% (2008: 5.76%) of the total assets have been allocated to segments based
on their respective incomes.
–
Unallocatable liabilities representing 1.29% (2008: 1.43%) of the total liabilities have been allocated to segments
based on their respective assets.
54,754 15,351 39,403 30,939 – – 7,160 0.03%
0.01%
134,328 1,443,099 37,660 1,124,418 96,668 318,681 232,741 17,860,780 – 1,826,499 – 1,963,567 17,565 188,717 0.07%
0.74%
0.02%
0.62%
19,420,093 19,064,250 355,843 199,052,264 9,862,918 9,049,164 189,870,694 10.00%
10.50%
85,136 23,736 61,400 45,108 – – 520 0.04%
0.01%
Agency
Services
12,242 3,413 8,829 6,486 – – 75 0.01%
0.00%
–
–
–
–
–
–
0.00%
0.00%
–
–
–
–
–
–
0.00%
0.00%
–
559,984
(559,984)
–
–
–
6,168,554
0.00%
0.26%
6,095 1,708 4,387 3,444 – – 797 0.00%
0.00%
–
–
–
–
–
–
–
0.00%
0.00%
–
–
–
–
–
–
–
0.00%
0.00%
–
383,785
(383,785)
–
–
–
3,129,356
0.00%
0.21%
2008
41,944 11,759 30,185 23,701 – – 5,486 0.02%
0.01%
page | 109
41.
RELATED PARTY TRANSACTIONS
As Army Welfare Trust (AWT) holds 50.17 % (2008: 50.17 %) of the Bank’s share capital at the year end, therefore, all
subsidiaries and associated undertakings of AWT are related parties of the Bank. Also, the Bank has related party
relationships with its subsidiary companies, its directors, key management personnel, entities over which the directors
are able to exercise significant influence and employees’ funds.
Details of transactions with related parties and balances with them at the year end were as follows:
December 31, 2009
December 31, 2008
Companies Companies
with common with common
Key directorship
Key directorship
management having equity Subsidiary Employee management having equity Subsidiary
Rupees in ‘000
Parent Personnel
Directors
under 20% Companies
Funds
Parent Personnel
Directors
under 20% Companies
Balances outstanding as at
– Advances
– Deposits
– 129,873 5,602,346 47,678 25 580,242 11,420 583,722 – Outstanding commitments and contingent
liabilities for irrevocable commitments
and contingencies
– – – – Investment in shares / Lendings- at cost
– – – 1,500,671 Transactions during the year ended
– Net mark–up / interest earned – Net mark–up / interest expensed – Contribution to employees’ funds – Rent of property / service charges received – Rent of property / service charges paid – 309,815 – 7,662 67,958 3,595 1,220 12,354 – 158,794 581 – – – – – – 59,619 – 12,137 51,125 – 57,713 – 212,789 – 11,991 – 163,875 74,378 524 631,904 34,644 59,063 609,455 – – – – – – – – 1,248,268 – 1,910 – 244,035 273 – – 780,947 – – – 49,029 – 12,080 72,532 2,088 212 – 2,816 – – – – – – 7,545 47,207 23,336 – 11,886 23,440 – 177,523 – 712,789 – 3,497 Employees
Funds
–
164,623
–
–
–
992
– 210,324
251 – –
–
– Remuneration paid – 155,434 – – – – – 127,596 – – – –
– Post employment benefits – – – – – – – – – –
11,899 12,974 – Insurance claim received – – – 3,356 – – – – – 1,502 – –
– Insurance premium paid – – – 32,529 – – – – – 56,925 – –
– Dividend Income – – – – – – – – 73,886 – –
– Security services costs – – – 143,315 – – – – – 97,160 – –
– – – – – – 165 – –
– Fee, commission and brokerage income – Payments and recovery to / from AIML
a wholly owned subsidiary of the Bank – – Fees paid – page | 110
379 – 105 – 655 – 869 296 – – – – – – – – – 110 – 755 – – 138 – –
–
42
CAPITAL ADEQUACY
42.1 Scope of Applications
Standardized Approach is used for calculating the Capital Adequacy for Market and Credit risk while Basic Indicator
Approach (BIA) is used for Operational Risk Capital Adequacy purpose.
The Bank has two subsidiaries, Askari Investment Management Limited (AIML) and Askari Securities Limited (ASL).
AIML is the wholly-owned subsidiary of Askari Bank Limited while ASL is 74% owned by the Bank. Both these entities
are included while calculating Capital Adequacy for the Bank using full consolidation method. The fact that Askari Bank
has neither any significant minority investments in banking, securities, or any other financial entities nor does it has
any majority or significant minority equity holding in an insurance excludes it from a need for further consolidation.
Furthermore, the Bank does not indulge in any securitization activity that shields it from the risk inherent in
securitization.
42.2 Capital Management
The objective of managing capital is to safeguard the Bank’s ability to continue as a going concern, so that it could
continue to provide adequate returns to shareholders by pricing products and services commensurately with the level
of risk. It is the policy of the Bank to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. The impact of the level of capital on shareholders’
return is also recognised and the Bank recognises the need to maintain a balance between the higher returns that
might be possible with greater gearing and the advantages and security afforded by a sound capital position.
Goals of managing capital
The goals of managing capital of the Bank are as follows:
–
To be an appropriately capitalised institution, considering the requirements set by the regulators of the banking
markets where the Bank operates
–
Maintain strong ratings and to protect the Bank against unexpected events
–
Availability of adequate capital at a reasonable cost so as to enable the Bank to operate adequately and provide
reasonable value added for the shareholders and other stakeholders
Bank’s regulatory capital analysed into three tiers
Tier I capital, which includes fully paid-up capital, share premium, reserves (excluding foreign exchange translation
reserves) and unappropriated profits (net of losses) etc. after deductions for certain specified items such as book
value of intangibles, 50% of other deductions e.g., majority and significant minority investments in insurance and other
financial entities.
Tier II capital, includes subordinated debt subject to a maximum of 50% of total Tier I capital and fulfillment of specified
criteria laid down by the State Bank of Pakistan, general provisions for loan losses (up to a maximum of 1.25 % of total
risk weighted assets), reserves on the revaluation of fixed assets and equity investments after deduction of deficit on
available for sale investments (up to a maximum of 45 percent), foreign exchange translation reserves etc. 50% of other
deductions noted above are also made from Tier II capital.
Tier III supplementary capital, which consists of short term subordinated debt solely for the purpose of meeting a
proportion of the capital requirements for market risks. The bank currently does not have any Tier III capital.
The total of Tier II and Tier III capital has to be limited to Tier I capital.
Banking operations are categorised as either trading book or banking book and risk-weighted assets are determined
according to specified requirements of the State Bank of Pakistan that seek to reflect the varying levels of risk attached
to on-balance sheet and off-balance sheet exposures. The total risk-weighted exposures comprise the credit risk,
market risk and operational risk.
page | 111
On and off-balance sheet assets in the banking book are broken down to various asset classes for calculation of credit
risk requirement. External ratings for assets, where available, are applied using the assessments by various External
Credit Assessment Institutions (ECAIs) and aligned with appropriate risk buckets. Otherwise, the exposures are treated
as unrated and relevant risk weights applied. In addition, there are fixed risk weights for certain types of exposures
such as retail portfolio and residential mortgage finance for which external ratings are not applicable. Collaterals if any,
are used as credit risk mitigant after applying appropriate haircuts under the Comprehensive Approach. Risk weights
notified, are hence applied at adjusted exposures, wherever credit risk mitigation is available. Collaterals used include:
Government of Pakistan guarantees, cash, lien on deposits, shares, government securities, bank guarantees and other
debt securities that fall within the definition of eligible collaterals and also fulfill other specified criteria under the
relevant capital adequacy guidelines.
The calculation of Capital Adequacy enables the Bank to assess the long-term soundness. As the Bank carries on the
business on a wide area network basis, it is critical that it is able to continuously monitor the exposure across the
entire organisation and aggregate the risks so as to take an integrated approach / view. There has been no material
change in the Bank’s management of capital during the period.
42.3 Capital adequacy ratio as at December 31, 2009
The capital to risk weighted assets ratio, calculated in accordance with the State Bank of Pakistan’s guidelines on
capital adequacy, using Basel II standardised approaches for credit and market risks and basic indicator approach for
operational risk is presented below.
Rupees in ‘000
Regulatory capital base
Tier I capital
Fully paid-up capital Reserves (excluding foreign exchange translation reserves)
Unappropriated / unremitted profits (net of losses)
Less: Book value of intangibles
Deficit on account of revaluation of investments
Other deductions (represents 50% of the majority or
significant minority investments in insurance and
other financial entities)
2009
2008
5,073,467 7,182,987 886,234 –
– 4,058,774
7,667,141
308,980
–
(921,689)
(106,395)
(106,395)
13,036,293 11,006,811
Subordinated debt (upto 50% of total Tier I capital)
General provisions for loan losses subject to 1.25% of total
risk weighted assets
Revaluation reserve (upto 45%)
Foreign exchange translation reserves
Less: Other deductions (represents 50% of the majority or
4,796,940 2,396,880
935,683 800,328 –
987,574
836,170
–
(106,395)
(106,395)
Total Tier II capital
6,426,556 4,114,229
Eligible Tier III capital Total regulatory capital
Total Tier I Capital
Tier II Capital
page | 112
– 19,462,849 –
15,121,040
Risk weighted exposures
Rupees in ‘000
Capital Requirement
2009
Risk Weighted Assets
2008
2009
2008
Credit risk
Portfolios subject to standardised approach
(comprehensive approach for CRM)
Claims on:
Sovereigns other than PKR claims
Public Sector Entities (PSEs)
Banks Corporates Retail portfolio
Residential mortgage finance
Listed equities and regulatory capital
instruments issued by others banks
Unlisted equity investments
Fixed Assets
Other Assets
Past Due Exposures
Forward Foreign Exchange Contracts
Market risk
Interest rate risk
Equity position risk
Foreign exchange risk
146,702 683,694 1,239,533 7,595,901 2,263,186 384,920 170,821 568,378 124,239 7,736,337 2,180,628 267,297 1,467,024 6,836,944 12,395,327 75,959,014 22,631,864 3,849,196 1,898,006
6,315,308
1,380,434
85,959,300
24,229,197
2,969,970
3,204,048 330,212 9,846,440 1,872,608 6,287,804 113,070 122,934
–
8,266,457
3,662,185
2,965,134
89,348
320,405 33,021 984,644 187,261 628,780 11,307 11,064 – 743,981 329,597 266,862 8,041 6,018 22,898 12,851 247,539 451,650 39,711 60,175 228,975 128,513 2,750,438
5,018,338
441,238
2,038,471 1,621,355 20,384,714 18,015,057
16,559,592 14,767,500 165,595,928 164,083,344
Operational risk Total
Capital adequacy ratio
Total eligible regulatory capital held
19,462,849 15,121,040
Total risk weighted assets
165,595,928 164,083,344
11.75%
9.22%
page | 113
43.
USE OF CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of financial statements in conformity with approved accounting standards as applicable in Pakistan
requires the use of certain accounting estimates. It also requires management to exercise its judgment in the process
of applying the Bank’s accounting policies. The Bank uses estimates and assumptions concerning the future. The
resulting accounting estimate will, by definition, seldom equal the related actual results. Estimates and judgments
are continually evaluated and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. The areas where assumptions and estimates are
significant to the Bank’s financial statements or where judgment was exercised in application of accounting policies
are as follows:
i)
ii)
iii)
iv)
v)
vi)
44.
RISK MANAGEMENT
Diversity of financial products and activities, deregulation and increased level of competition has necessitated the
need for an effective and structured risk management in banks. At Askari Bank Limited, risk management framework
comprises of a Risk Management Committee (RMC) and a risk management group. RMC is a Board level sub-committee
primarily responsible for the identification, measurement, monitoring and controlling of the Bank’s principal business
risks, adherence to internal risk management policies and compliance with risk related regulatory requirements. The
risk management group is mainly responsible for managing credit, market and operational risks.
classification of investments (note 9)
provision against investments (note 9.2.1) and advances (note 10)
revaluation of freehold and leasehold land (note 11)
useful life of property and equipments (note 11)
income taxes (note 31)
staff retirement benefits (note 35 to note 37)
44.1 Credit Risk:
Credit risk is the risk that arises from the potential that an obligor is either unwilling to perform an obligation or
its ability to perform such obligation is impaired resulting in economic loss to the Bank. The Bank takes necessary
measures to control such risk by monitoring credit exposures, limiting transactions with specific counter parties with
increased likelihood of default and continually assessing the creditworthiness of counter parties.
The focus of the Bank’s commercial lending continues to be short-term trade related financing on a secured and self
liquidating basis. The Bank will also continue its emphasis on diversification of its assets to avert large single industry
or group concentration exposures.
The Bank has built and maintains a sound loan portfolio in terms of a well defined Credit Policy approved by the
Board of Directors. It’s credit evaluation system comprises of well-designed credit appraisal, sanctioning and review
procedures for the purpose of emphasizing prudence in its lending activities and ensuring quality of asset portfolio.
Special attention is paid to the management of non-performing loans. A procedure is also functioning which identifies
loans showing early warning signals of becoming non-performing.
The Bank constantly monitors overall credit exposure and takes analytical and systematic approaches to its credit
structure categorized by group and industry. The credit portfolio is well diversified sectorally with manufacturing and
exports accounting for the bulk of the financing which is considered to be low risk due to the nature of underlying
security.
The Bank is further diversifying its asset portfolio by offering, Consumer Banking products (Personal Finance, Business
Finance, Mortgage Finance and Auto Financing etc.) to its customers, as it provides better margins than traditional
business lending opportunities, whilst spreading the risk over a large number of individual customers and Agriculture
Credit products, primarily aimed to provide quick and cheap credit to the farmers at their door-steps in a simplified
manner.
Risk Management Division has an independent Portfolio Monitoring Department. Dedicated resources are assigned
to scrutinize corporate, commercial, consumer, SME, and agriculture portfolio on a continuous basis and report crucial
findings to the senior management for strategic decision making. Risk factors are identified and necessary actions
are recommended to mitigate these risk factors. During the year portfolio monitoring department also prepared the
Internal Capital Adequacy Assessment Process (ICAAP) and Risk Appetite Policy of the Bank.
44.1.1
Segment information
Segmental Information is presented in respect of the class of business and geographical distribution of advances,
deposits, contingencies and commitments.
page | 114
44.1.1.1 Segment by class of business
Advances
2009
Deposits Contingencies and Commitments
Rupees in ‘000
Percent
Rupees in ‘000
Percent Rupees in ‘000 Percent
Agriculture / Agribusiness
Automobiles & Allied
Cables / Electronics
Carpets Cements
Chemicals / Pharmaceuticals
Engineering
Fertilizers
Food and Allied
Fuel / Energy
Ghee and Edible oil
Glass and Ceramics
Hotels and Restaurants
Individuals
Insurance
Investment banks / Scheduled banks
Leasing
Leather products and Shoes
Modarabas
Paper and Board
Plastic products
Ready-made garments
Real estate / Construction
Rice processing and trading
Rubber products
Services
(Other than Financial, Hotelling & Traveling)
Sports goods
Sugar
Surgical equipment / Metal products
Synthetic and Rayon
Textile
Tobacco / Cigarette manufacturing Transport and Communication
Travel Agencies
Woolen
Public sector / Government
Others
6,341,128 936,799 6,654,032 167,974 3,898,451 6,932,091 342,837 697,771 2,254,348 6,297,501 3,096,881 1,637,002 200,844 19,219,488 – 500,000 601,042 1,110,415 46,135 266,162 587,669 942,856 8,686,079 2,777,431 137,429 4.30 0.63 4.51 0.11 2.64 4.70 0.23 0.47 1.53 4.27 2.10 1.11 0.14 13.02 – 0.34 0.41 0.75 0.03 0.18 0.40 0.64 5.88 1.88 0.09 2,540,447 1,011,748 1,956,777 72,374 469,657 2,823,250 55,908 345,870 227,324 2,954,673 61,782 52,076 317,336 72,598,543 168,282 2,069,564 115,030 565,023 50 77,799 141,311 441,692 10,528,701 582,266 54,774 1.23 0.49 0.95 0.04 0.23 1.37 0.03 0.17 0.11 1.43 0.03 0.03 0.15 35.25 0.08 1.00 0.06 0.27 0.00 0.04 0.07 0.21 5.11 0.28 0.03 1,072,237 585,236 515,161 4,202 663,216 4,072,601 1,001,645 1,310,261 570,060 9,438,617 2,708,441 21,007 8,473 544,439 1,607 87,546,447 – 63,443 – 398,088 960,800 521,097 16,157,372 376,481 97,696 0.67
0.37
0.32
0.00
0.41
2.55
0.63
0.82
0.36
5.90
1.69
0.01
0.01
0.34
0.00
54.72
–
0.04
–
0.25
0.60
0.33
10.10
0.24
0.06
2,556,054 580,611 121,496 5,976,903 1,115,062 27,240,388 – 4,572,958 114,151 37,002 16,047,820 14,933,533 1.73 0.39 0.08 4.05 0.76 18.45 – 3.10 0.08 0.03 10.87 10.12 5,785,847 76,490 40,920 465,580 19,512 1,512,762 19,682 5,200,927 156,349 58,904 59,438,689 32,962,308 2.81 0.04 0.02 0.23 0.01 0.73 0.01 2.53 0.08 0.03 28.86 16.00 777,982 161,511 3,550 1,997,286 72,272 4,333,202 2,275 2,885,873 353,421 3,165 18,615,328 2,140,930 0.49
0.10
0.00
1.25
0.05
2.71
0.00
1.80
0.22
0.00
11.64
1.34
205,970,227 100.00 159,985,422 100.00
147,628,343 100.00 44.1.1.2 Segment by sector
Private
Advances
2009
Rupees in ‘000
Percent
Rupees in ‘000
16,047,820 131,580,523 10.87 89.13 59,438,689 146,531,538 28.86 71.14 18,615,328 141,370,094 11.64
88.36
147,628,343 100.00 205,970,227 100.00 159,985,422 100.00
page | 115
44.1.1.3 Details of non-performing advances and specific
provisions by class of business segment
Rupees in ‘000
Food & Allied
Fuel / Energy
Individuals
Leather products and Shoes
Services
Textile Glass manufacturing
Commodities
Metal industries
Paper industries
Sports goods
Others
2009
Classified Advances
2008
Specific Provision Held Classified advances Specific
Provision Held
162,493 661,808 1,277,931 48,355 156,248 1,609,741 2,592,542 50,915 1,911,855 – 572,163 887,426 36,075 105,576 1,354,425 2,025,186 28,407 41,644 26,417 568,724 959,781 32,418 156,201 640,664 1,826,499 66,186 302,710 –
451,616
787,220
25,164
118,906
845,568
1,548,976
47,637
88,198
113,737 5,328,436 1,110,342 497,388 511,819 398,770 546,176 746,895 109,252 3,925,396 785,230 383,109 278,289 173,005 501,176 451,802 22,577 3,995,739 1,111,782 447,357 198,187 356,188 678,951 299,036 19,863
3,520,832
1,111,782
294,757
169,400
178,095
678,951
138,192
17,725,451 11,658,161 11,689,417 10,025,157
– 17,725,451 – 11,658,161 – 11,689,417 –
10,025,157
17,725,451 11,658,161 11,689,417 10,025,157
44.1.1.4 Details of non-performing advances and
specific provisions by sector
Private
44.1.1.5
Geographical segment analysis
Rupees in ‘000 Pakistan
Asia Pacific (including South Asia)
Europe
United States of America and Canada
Middle East – note 45.1.5.1
Others
Profit before taxation 2009
Total assets Net assets employed employed Contingencies
and
Commitments
1,480,722 – – – 161,519 – 249,810,500 – – – 4,516,946 – 14,808,526 – – – 140,546 – 159,985,422
–
–
–
–
–
1,642,241 254,327,446 14,949,072 159,985,422
44.1.1.5.1 These do not include intra group items of Rs. 4,270,733 thousand (2008: Rs. 5,431,350 thousand) eliminated upon
consolidation of foreign branch results.
44.1.1.5.2 Contingencies and commitments include amounts given in note 22 except bills for collection.
page | 116
44.1.2
Credit risk - General disclosures basel II specific
Basel II Standardized Approach is used for calculating the Capital Adequacy for Credit Risk and Market risk, (along
with Comprehensive Approach for Credit Risk Mitigation CRM) whereas, Basic Indicator Approach (BIA) is used for
Operational Risk Capital Adequacy purposes.
44.1.2.1
Types of exposures and ECAIs used
For domestic claims, ECAIs recommended by the State Bank of Pakistan (SBP), namely Pakistan Credit Rating
Agency Limited (PACRA) and JCR-VIS Credit Rating Company Limited (JCR-VIS) were used. For foreign currency
claims on sovereigns, risk weights were assigned on the basis of the credit ratings assigned by Moody’s. For
claims on foreign entities, rating of S&P, Moody’s, and Fitch Ratings were used. Foreign exposures not rated by
any of the aforementioned rating agencies were categorized as unrated.
Type of exposures for which each agency is used in the year ended 2009 is presented below:
Exposures
PSEs
Banks Corporates
JCR-VIS
PACRA
S&P, Moody’s & Fitch
–
3
3
3
–
3
3
3
3
–
3
3
Credit exposures subject to standardised approach
Exposures
2009
Net
Amount
Amount
outstanding
2008
Rating
category Amount
outstanding
Deduction
CRM*
Sovereigns
4,5
PSEs
1
PSEs
2
Banks
1,2,3
Corporates
1
Corporates
2
Corporates
3,4
Corporates
5,6
Unrated
1,467,024 2,801,570 90,000 9,811,146 6,316,860 12,336,024 1,829,888 144,037 220,013,333 – 10,000 – – – 98,094 48,757 – 26,449,674 1,467,024 2,791,570 90,000 9,811,146 6,316,860 12,237,930 1,781,131 144,037
193,563,659 167,485,157 12,814,776 154,670,381
Total
254,809,882 26,606,525 228,203,357 177,347,106 12,999,533 164,347,573
* CRM= Credit Risk Mitigation
– 1,599,095 – 952,693 2,892,253 4,288,524 129,384 Deduction
CRM*
– – – –
– 184,000 757 Net
Amount
–
1,599,095
–
952,693
2,892,253
4,104,524
128,627
page | 117
Following is list of main types of collateral taken by the Bank.
– Cash margins or deposits under lien
– Lien on SSCs, DSCs, etc.
– Residential / commercial mortgage (registered)
– Residential / commercial mortgage (equitable)
– Secured by agricultural land
– Registered charge on stocks, book debts, receivables and other assets
– Pledge of stocks - perishable / non-perishable
– Shares of public listed companies
– Guarantees of Government, Banks Autonomous bodies
– Local bills - cheques / documentary bills
– Import bills - clean
– Export bills – clean
Collateral used by the Bank for Credit Risk Mitigation (CRM) in the simple approach was as follows:
– Cash margin
– Government Securities (with value discounted by 20%)
– Government Securities (for repo-style transactions satisfying conditions for zero-H)
– Guarantees of Government, Banks, PSEs and rated Corporates
44.2 Market Risk:
Market risk, or the risk that the Bank’s earnings and / or capital can be negatively impacted by changes in market
factors such as equity prices, interest rates, and exchange rates, originates from the Bank’s open positions in interest
rate, currency, and equity products that are exposed to market movements. Traded market risk exposures arise from
the Bank’s treasury and capital market operations. Non-traded market risk factors include interest rate risk in the
banking book, equity position risk arising from the Bank’s strategic investments, and structural foreign exchange risk
arising from the Bank’s capital investments in off-shore operations.
The Bank has a policy of identification, measurement, monitoring and control of market risks in order to protect
against adverse movements in market factors and to optimize the risk / return profile of its open positions. The
Market Risk Management Department (“MRMD”) of the Risk Management Division (“RMD”) of the Bank develops and
implements the market risk policy and risk measuring / monitoring methodology, and reviews and reports market
risk against regulatory and internal limits. A Value-at-Risk (“VaR”) methodology is used to measure traded market
risk. In compliance with Basel requirements, VaR is modeled using variance-covariance and historical approaches,
at a 99% confidence interval over a 1-day and 10-day holding period for equity and debt positions in the trading book,
and foreign exchange positions throughout the trading and banking books. Back testing of VaR estimates against
hypothetical P&Ls is carried out on daily basis in order to assess their reliability and the performance of the VaR
models. To supplement the VaR figures, possible worst-case losses are also quantified by MRMD using historical data.
Sensitivity analysis are carried out to gauge the impact of extreme market movements on traded exposures and stress
testing as per SBP guidelines is used to assess non-traded market risk, in particular interest rate risk in the banking
book. Market risk capital charge for the Bank is also calculated periodically using Basel II Standardized Approach. The
MRMD monitors risk by revaluing all traded market risk exposed positions on a daily basis, and the risk is controlled by
ensuring that these positions do not breach regulatory limits and the Bank’s own internally set limits.
page | 118
44.2.1 Foreign Exchange Risk
Foreign exchange risk is the risk that the earnings and / or capital will fluctuate due to changes in foreign exchange
rates. The Bank’s foreign exchange exposure consists of foreign currency cash in hand, balances with banks abroad,
forward contracts, purchase of foreign bills, foreign currency placements with State Bank of Pakistan (SBP), foreign
currency deposits and capital investments in offshore operations. The Bank manages its foreign exchange exposures
by matching foreign currency assets and liabilities. The net open position and nostro balances are maintained with
in statutory limits, as fixed by SBP and counterparty limits have been established to limit risk concentration. VaR is
calculated for consolidated foreign exchange exposure with Treasury on a daily basis. Daily sensitivity analysis of the
net open position to a change in ISD/ PKR parity is also carried out.
(Rupees in ‘000)
Pakistan Rupees
U.S. Dollars
Pound Sterling
Japanese Yen
Euro
Other European Currencies
Other Currencies 2009
Assets
Liabilities 219,477,274 20,471,471 1,133,695 4,377 2,651,783 6,826 735,580 207,375,514 26,407,639 2,569,138 968 2,682,898 – 8,292 244,481,006 239,044,449 Off-balance
sheet items
Net foreign
currency
exposure
6,905,996 (5,624,243)
(1,450,514)
63,406 (5,101)
– 110,456 19,007,756
(11,560,411)
(2,885,957)
66,815
(36,216)
6,826
837,744
– 5,436,557
44.2.2 Equity position risk
Equity position risk is the risk that the value of the Bank’s equity positions can change as a result of broad equity
market and security-specific movements. The Bank’s equity exposures are of three types: held for trading, available for
sale, and strategic.
Held for trading equity exposures are undertaken to earn profit through market imperfections and arbitrage
opportunities and hence of a short-term nature. Available for sale equity investments are made with the intent to
earn profit from company and industry fundamentals. Strategic investments are undertaken in line with long-term
strategy of the Bank. All equity positions in held for trading and available for sale portfolios are subject to exposure
limits established by the Bank in line with general limits prescribed by SBP in its Prudential Regulations. These limits
include intraday limits, stop-loss limits, exposure limits, portfolio limits, and sectoral limits. The equity exposures are
revalued and scrip-wise / portfolio VaR is calculated on a daily basis.
44.2.3 Yield / Interest Rate Risk in the Banking Book (IRRBB)-Basel II Specific
The Bank’s interest rate exposure originates from its investing, lending and borrowing activities. Interest rate risk in the
banking book is the risk of adverse changes in earnings and / or capital due to mismatched assets and liabilities in the
banking book. The Asset and Liability Management Committee (ALCO) of the Bank monitors and controls mismatch
of interest rate sensitive assets and liabilities. The MRMD calculates duration and convexity measures to assess the
impact of interest rate changes on its investment portfolio. VaR for the Bank’s debt investments is also generated on a
daily basis. Interest rate risk stress tests are conducted bi-annually to assess the impact of a parallel shift in the yield
curve on the Bank’s capital using sensitivity positions calculated using earlier of contractual re-pricing or maturity date
for on-balance sheet instruments, and settlement date for off-balance sheet instruments.
page | 119
44.2.4
Mismatch of interest rate sensitive assets and liabilities
Yield / interest rate sensitivity position for on-balance sheet instruments is based on the earlier of contractual repricing or maturity date and for off-balance sheet instruments is based on settlement date.
Rupees in ‘000
On-balance sheet financial instruments
Assets
Investments
Advances
Other assets
Effective Yield / Interest
rate
0.00%
1.30%
12.24%
12.17%
12.12%
–
2009
Exposed to yield/ interest risk Non-interest
Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 bearing
Upto 1 to 3 to 6 Months to 1 to 2 to 3 to 5 to 10 Above 10 financial
Total Month Months Months Year Years Years Years Years
Years instruments
19,385,843 4,832,003 – – – – – – – – 8,364,261 6,464,278 – – – – – – – – 4,614,059 3,214,486 1,399,573 – – – – – – – 67,046,033 3,632,260 10,687,078 12,162,099 15,998,534 5,705,522 4,091,785 7,540,537 2,596,551 – 135,034,499 20,463,411 29,638,309 33,324,055 35,945,251 560,336 442,849 2,398,498 2,935,107 9,326,683 10,036,311 – – – – – – – – – 244,481,006 38,606,438 41,724,960 45,486,154 51,943,785 6,265,858 4,534,634 9,939,035 5,531,658 14,553,840
1,899,983
–
4,631,667
–
10,036,311
9,326,683 31,121,801
Liabilities
Bills payable
Borrowings
Sub-ordinated loans
Other liabilities
–
7.79%
6.65%
16.18%
–
–
–
2,945,670 – – – – – – – – 19,300,163 6,554,983 9,320,127 3,425,053 – – – – – 205,970,227 47,056,279 26,179,875 19,792,129 20,532,523 13,953,374 14,046,568 17,884,614 36,484 5,994,900 – 300 775 1,075 2,150 2,150 2,993,200 2,995,250 – – – – – – – – – – – – – – – – – – 4,833,489 – – – – – – – – –
–
–
–
–
–
–
239,044,449 53,611,262 35,500,302 23,217,957 20,533,598 13,955,524 14,048,718 20,877,814 3,031,734 – 54,267,540
2,499,924 9,326,683 (23,145,739)
On-balance sheet gap Off-balance sheet financial instruments
Commitments to extend credits
Off-balance sheet gap
Total yield / interest risk sensitivity gap (17,908,560)
Cumulative yield / interest risk sensitivity gap (17,908,560) (11,683,902) 10,584,295 41,994,482 34,304,816 24,790,732 13,851,953 16,351,877 25,678,560 12.11%
11.96%
–
5,436,557 (15,004,824)
3,922,616 4,493,702 2,332,650 6,224,658 22,268,197 31,410,187 (7,689,666) (9,514,084) (10,938,779)
2,945,670
–
46,488,381
–
–
–
4,833,489
3,922,616 4,493,702 2,332,650 – – – – – – – – – – – – – – – – – – – – – – – – –
–
–
(2,903,736) (2,903,736)
– – – – – – – – –
6,224,658 22,268,197 31,410,187 (7,689,666) (9,514,084) (10,938,779)
2,499,924 9,326,683 (23,145,739)
2,532,821
44.2.4.1 Yield risk is the risk of decline in earnings due to adverse movement of the yield curve.
44.2.4.2 Interest rate risk is the risk that the value of the financial instrument will fluctuate due to changes in the market
interest rates.
page | 120
44.3 Liquidity Risk
Liquidity risk reflects an enterprises inability in raising funds to meet commitments. The Bank’s liquidity position is
managed by the Asset and Liability Management Committee (ALCO). ALCO monitors the maintenance of financial
position liquidity ratios, depositors concentration both in terms of the overall funding mix and avoidance of undue
reliance on large individual deposits and liquidity contingency plans. Moreover, core retail deposits (current accounts
and saving accounts) form a considerable part of the Bank’s overall funding and significant importance is attached to
the stability and growth of these deposits.
Upto 1 Rupees in ‘000
Total Month Assets
Investments
Advances
Deferred tax assets
Other assets
19,385,843 8,364,261 4,614,059 67,046,033 135,034,499 9,846,440 – 10,036,311 19,385,843 8,364,261 3,214,486 3,632,260 20,463,411 37,130 – 183,896 Over 1 to 3 Months 2009
Over 3 Over 6 to 6 Months to Months 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years Over 5
to 10 Years Above 10
Years
– – – – – – – –
– – – – – – – –
1,399,573 – – – – – – –
10,803,488 12,162,099 15,998,534 9,941,126 4,091,785 7,540,537 2,663,415 212,789
29,638,309 33,324,055 35,945,251 560,336 442,849 2,398,498 2,935,107 9,326,683
834,759 903,823 318,578 575,191 478,194 686,291 801,285 5,211,189
– – – – – – – –
6,610,513 136,208 2,960,192 145,502 – – – –
254,327,446 55,281,287 49,286,642 46,526,185 55,222,555 11,222,155 5,012,828 10,625,326 6,399,807 14,750,661
Liabilities
Bills payable
Borrowings
Liabilities against assets subject to
finance lease
Other liabilities
2,945,670 1,472,835 1,472,835 – – – – – – 19,300,163 6,554,983 9,320,127 3,425,053 – – – – – 205,970,227 57,704,999 31,504,235 25,434,296 26,174,689 20,758,226 19,368,319 24,988,979 36,484 5,994,900 – 300 775 1,075 2,150 2,150 2,993,200 2,995,250 239,378,374 69,143,486 43,526,581 28,860,124 26,341,622 20,760,376 19,370,469 28,343,982 Net assets
Share Capital
Reserves
Surplus on revaluation of assets
– – – 333,925 (27,878)
– 4,833,489 3,438,547 1,229,084 14,949,072 (13,862,199)
– – – – – 165,858 5,760,061 17,666,061 28,880,933 – – – – – – – 361,803 – (9,538,221) (14,357,641) (17,718,656)
– – – 3,031,734 –
–
–
–
–
–
–
3,368,073 14,750,661
5,073,467
7,182,987
886,234
1,806,384
14,949,072
page | 121
44.4 Operational risk
Operational risk is the possibility of financial losses occurring due to shortcomings or failure of internal processes, in
information technology or in people, or as a result of adverse external events. This definition includes legal risk but not
strategic risk or reputational risk.
Operational risk management is governed by well defined policy and procedures, integrated through a comprehensive
framework clearly communicated across the Bank;
Materialized actual loss arising from operational error, violation of regulator law / system, trouble, disaster, accident,
damage to tangible assets and external frauds are monitored by operational risk. Potential risks / losses are identified
and assessed through Key risk indicators and Risk and Control Self Assessment of branches and business and support
units.
Further, during the year number of policies and procedures have been reviewed to strengthen the system and
processes. One of the major component of operational risk being the potential of disruption to business operation
due to exceptional event that may disrupt system, infrastructure and human resource are given prime importance and
Business Continuity Plan has been revised to cater to current threats being faced.
44.4.1 Operational risk disclosures Basel II
The Bank approach in managing operational risk is to adopt practices that are fit for the purpose to suit the
organizational maturity and particular environments in which our business operates. Operational Risk Management
(ORM) has been entrenched to increase the efficiency and effectiveness of the Bank’s resources, minimize losses and
utilize opportunities.
45.
NON-ADJUSTING EVENTS AFTER THE BALANCE SHEET DATE
45.1 The Board of Directors in its meeting held on February 23, 2010 has proposed a cash dividend of Nil (2008: Nil). In
addition, the directors have also announced a bonus issue of 20 percent (2008: 25 percent). The appropriation will
be approved in the forthcoming Annual General Meeting. The financial statements for the year ended December 31,
2009 do not include the effect of the appropriation which will be accounted for in the financial statements for the year
ending December 31, 2010 as follows:
Rupees in ‘000
Transfer from unappropriated profit to:
Proposed dividend Reserve for issue of bonus shares General reserve Transfer from general reserve to:
Reserve for issue of bonus shares
page | 122
2009
– – 886,234
1,071,240
2008
–
308,980
1,014,693
45.2 During the year, the Bank initiated the process of amalgamation of Askari Leasing Limited (ALL) with and into the Bank.
The scheme of amalgamation under section 48 of the Banking Companies Ordinance, 1962 has been approved by the
shareholders of both companies in the Extra Ordinary General Meetings of the Bank and ALL held on December 21,
2009 and December 22, 2009 respectively and has also been subsequently approved by the Competition Commission
of Pakistan and the Securities and Exchange Commission of Pakistan. The final approval by the State Bank of Pakistan
has been received vide letter No. BPRD (R&P-02)/625-99/2010/1256 dated February 18, 2010, whereby the scheme
of amalgamation is effective within 30 days from the date of approval. The effective date of amalgamation will be
March 3, 2010 as per decision of the management of both entities. Consequently, the Bank shall issue 28.273 million
shares of the Bank to the shareholders of ALL.
46.
CORRESPONDING FIGURES
Previous year’s figures have been rearranged and reclassified where necessary for the purposes of comparison.
47.
GENERAL
47.1 Figures have been rounded off to the nearest thousand of rupees unless otherwise stated.
47.2 Captions as prescribed by BSD Circular No. 4 dated February 17, 2006 issued by the State Bank of Pakistan in respect
of which there are no amounts have not been reproduced in these financial statements except for the statement of
financial position and profit and loss account.
48.
DATE OF AUTHORIZATION
These financial statements were authorised for issue on February 23, 2010 by the Board of Directors of the Bank.
M. R. Mehkari
Director
Director
Lt. Gen. Javed Zia
Chairman
page | 123
Annexure-I
Referred to in note 10.7 to these financial statements
Statement in terms of sub-section (3) of section 33-A of the Banking Companies Ordinance, 1962 in respect of written off loans
or any other financial reliefs of Rs. 500,000 or above allowed to a person(s) during the year ended December 31, 2009.
(Rupees in ‘000)
Outstanding liabilities at the beginning of the year
Interest/
Sr. Name and address
Name of Individuals / Interest/
Principal
Mark-up
No. of the Borrower
Partners / Directors
Father’s / Husband’s Name
Principal
Mark-up
Other
Total Written-off Written-off
1 Mohib Exports Limited
8-KM, Managa, Raiwind Road, Kasur
2 A. H. International (Pvt) Limited
D-99, S.I.T.E, Karachi
3 Rasool Textile (Pvt) Limited
250-N, Model Town Extension,
Lahore
4 Shahanshah Trading Company
Shop # 28, A.Q. Market,
Sukkur
5 MIA Traders (Private) Limited
Flat # 5, Bashir Plaza,
Markaz I-9, Islamabad
6 Ali’s International
242/1 Sector-24,
Korangi Industrial Area, Karachi
7 Bakeline Products
Plot # 117, Street # 8,
Sector I-10/3, Islamabad
8 Shahzad Siddique (Pvt) Limited
4.5-KM, Jaranwala Road,
Khurrianwala,
Faisalabad
Arif Saigol
35202-9563094-9
Abid Saigol
270-92-006204
Asif Saigol
270-92-006202
M. Rafique Saigol
Muhammad Adan Shirazi
42301-8051825-9
Seema Shirazi
42301-655746-4
Malik Zain
42301-3375828-9
Mohsin Shirazi
Khalid Mahmood
35202-9557295-5
Zakia Khalid
35202-4495862-0
Ch. Ali Ahmed
Namo Mal
45504-0489491-9
Mavel Das
Muhammad Idrees
276-54-176702
Musarrat Ghazala
276-54-065860
Muhammad Ashraf
294-91-020493
Nasreen Ashraf
294-62-733932
Muhammad Mujeeb
502-55-614751
Fazal-ul-Qadir
101-57-137982
Ghulam Hassan
601-88-385774
Muhammad Rafiq
Qazi Rahat Ali
42301-9140443-9
Qazi Musarrat Ali
Fahad Hameed
210-67-419868
Faisal Hafeez Khan
210-67-234299
Abdul Hameed
7,357 –
17,175 9,818 7,357 1,246,268 201,118 – 1,447,386 700,096 9,150 2,743 –
11,893 3,976 1,101 –
28,692 27,759 10,000 582 Total
–
17,175
201,118 –
901,214
–
1,965 –
1,965
5,077 –
551
–
551
–
56,451
–
27,451 –
27,451
2,707 - 12,707 - 2,707 - 2,707
1,411 - 1,993 - 1,363 - 1,363
Muhammad Siddique Ch.
Ali Muhammad Ch.
48,610 23,893 - 33100-6598842-7
Sheraz Siddique
33100-1704018-3
Shahzad Siddique
33100-1017331-1
72,503 33,053 23,893 - 56,946
- 1,625,185 742,967 266,405 M. Rafique Saigol
M. Rafique Saigol
Muhammad Adnan Shirazi
Malik Naseem Akhtar
Khalid Mahmood
Muhammad Idrees
Taj Din
Muhammad Ashraf
Muhammad Yasin
Ch. Ghulam Qadir
Khuda Dad
Abdul Hafeez
Total
page | 124
9,818 Other
Financial
relief
provided
1,357,096 268,089 - 1,009,372
Annexure-II
Statement of Financial Position (Islamic Banking)
The Bank is operating 31 Islamic banking branches including 2 sub-branches at the end of 2009 as compared to 20 Islamic
banking branches including 2 sub-branches at the end of 2008. During the year one conventional banking branch was
converted to Islamic banking branch.
Rupees in ‘000
2009
2008
Assets
Balances with and Due from Financial Institutions
Investments
Financing and Receivables
– Murahaba
– Ijarah
– Musharaka
– Diminishing Musharaka
– Salam
– Other Islamic Modes Other assets
655,346 1,232,181 2,314,008 402,465
260,738
2,388,729
650,043 1,863,205 – 3,323,294 22,069 13,681 950,884 901,983
2,087,884
–
3,116,617
139,098
12,253
724,014
Total Assets
11,024,711 10,033,781
Liabilities
Bills payable
Due to Financial Institutions
– Current Accounts
– Saving Accounts
– Term Deposits
– Others
– Deposit from Financial Institutions - remunerative
– Deposits from Financial Institutions - non remunerative
Due to head office
Other liabilities
77,331 - 41,216
520,000
935,296 2,028,559 3,647,582 2,945 838,591 4,417 1,882,383 689,235 861,287
1,396,961
1,743,848
2,777
1,393,078
8,364
2,653,575
658,995
10,106,339 9,280,101
Net assets
918,372 753,680
Islamic Banking Fund
Reserves
Unappropriated/ Unremitted profit/(loss)
850,000 –
68,372 700,000
–
53,680
Surplus/ (Deficit) on revaluation of assets
918,372 –
753,680
–
918,372 753,680
1,086 979
Opening Balance
Additions during the year
Payments/Utilization during the year
487 4,702 (2,818)
318
840
(671)
Closing Balance
2,371 487
Represented By
Remuneration to Shariah Advisor/Board
Charity fund
page | 125
Annexure-II
Profit and Loss Account (Islamic Banking)
Rupees in ‘000
2009
2008
Profit / return earned on financings, investments and placements
Return on deposits and other dues expensed
1,182,490 683,262 822,494
460,010
Net spread earned
499,228 362,484
Provision against non-performing financings
Provision for diminution in the value of investments
63,484 75,000 - 8,519
-
138,484 8,519
Income after provisions
360,744 353,965
Other Income
Fee, commission and brokerage Income
Dividend income
Capital gain on sale of securities
Unrealised gain / (loss) on revaluation of investments
Other income
12,288 - 2,154 - 13,184
1,256
-
- 22,507 18,172
Total other income
36,949 32,612
397,693 386,577
Other expenses
Other provisions / write offs
Other charges
383,001 - - 309,356
-
Total other expenses
383,001 309,356
Extra Ordinary / unusual items
14,692 - 77,221
-
14,692 77,221
page | 126
Shariah Advisor’s Report 2009
Alhamdolillah! The year 2009 has been a successful year for Askari Bank’s Islamic Banking Services, as eleven new full
fledged Islamic Banking Branches have been opened during the year, including conversion of Kohat Branch, from Conventional
to Islamic Banking. There are now 29 full fledged Islamic Banking Branches and 2 Islamic sub-branches, on a stand-alone
basis.
As per Shariah requirements, special care is continuously taken, on an ongoing basis, to ensure that the funds and products
of Islamic Banking are managed separately from the conventional banking side. All funds obtained, invested and shared are
in Halal modes and investments, under my supervision as the Shariah Advisor of the Bank.
As a Shariah Advisor, I have reviewed each class of transactions conducted during the year. Relevant documentation and
procedures adopted in this connection have also reviewed and vetted by me. In order to facilitate this work, Shariah Audit and
Shariah Compliance departments are functioning under my supervision.
In my opinion, the affairs of Askari Bank Limited - Islamic Banking have been carried out in accordance with the rules and
principles of Shariah, SBP regulations and guidelines related to Shariah compliance and other rules, as well as with specific
fatawa and rulings issued by me, as the Shariah Advisor from time to time.
Besides, the allocation of funds, weightages, profit sharing ratios, profits and charging of losses (if any), relating to PLS
accounts also conform to the basis vetted by me as the Shariah Advisor, in accordance with the Shariah rules and principles.
Any earnings that have been realized from sources, or means, prohibited by Shariah rules and principles have been credited
to charity account.
We remain fully committed to contributing to capacity building and promoting the cause of Islamic Banking in Pakistan.
May Allah Almighty bless our sincere efforts!
Shariah Advisor
page | 127
page | 128
Askari Bank Limited
page | 129
Askari Bank Limited | Consolidated Financial Statements
page | 130
We have audited the annexed consolidated financial statements comprising consolidated statement of financial position of
Askari Bank Limited (the Bank) and its subsidiary companies as at December 31, 2009 and the related consolidated Profit
and Loss Account, consolidated Statement of Changes in Equity and consolidated Cash Flow Statement, together with the
notes forming part thereof, for the year then ended; these financial statements include unaudited certified returns from
the branches, except for 20 branches, which have been audited by us and 1 branch audited by auditors abroad. We have
also expressed separate opinions on the financial statements of Askari Bank Limited and its subsidiary companies Askari
Investment Management Limited and Askari Securities (Pvt) Limited. These financial statements are the responsibility of
Bank’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the International Standards on Auditing as applicable in Pakistan. These standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing accounting policies and significant estimates made
by management, as well as, evaluating the overall presentation of the financial statements. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements examined by us, based on 20 branches audited by us and the returns
referred to above received from the branches which have been found adequate for the purpose of our audit, present fairly
the financial position of Askari Bank Limited and its subsidiary companies as at December 31, 2009 and the results of their
operations, changes in equity and their cash flows for the year then ended in accordance with approved accounting standards
as applicable in Pakistan.
Islamabad
February 23, 2010
A.F. Fergousan & Co.
page | 131
Rupees in ‘000
Notes
2009
2008
Assets
6
7
Lendings to financial institutions 8
Investments
9
Advances
10
11
Deferred tax assets
Other assets
12
19,385,850 8,374,640 4,649,059 66,885,617 135,039,901 9,917,192 – 10,101,179 16,029,666
3,967,816
4,479,754
35,464,972
128,818,242
8,345,054
–
9,021,883
254,353,438 206,127,387
2,945,670 19,300,163 205,912,903 5,994,900 11,543 333,925 4,866,463 2,584,828
15,190,148
167,505,312
2,996,100
16,573
16,173
4,779,448
239,365,567 193,088,582
Net assets
14,987,871 13,038,805
Share capital
20
Reserves
21
5,073,467 7,234,318 856,439 4,058,774
7,689,227
338,225
22
Minority interest
13,164,224 1,806,384 17,263 12,086,226
936,468
16,111
14,987,871 13,038,805
Liabilities
Bills payable
Borrowings
Sub-ordinated loans
Other liabilities
13
14
15
16
17
18
19
Represented By
Contingencies and commitments
23
The annexed notes 1 to 49 form an integral part of these consolidated financial statements.
M. R. Mehkari
page | 132
Director
Director
Lt. Gen. Javed Zia
Chairman
Rupees in ‘000
Notes
26
27
2009
2008
22,665,248 13,617,228 18,395,742
10,647,277
9,048,020 7,748,465
Provision against non-performing loans and advances
10.5
9.2.1
8
2,324,377 431,058 76,784 82,674 – 3,824,778
–
508
–
247,360
2,914,893 4,072,646
6,133,127 3,675,819
Net mark-up / interest income after provisions
Non mark-up / interest income
Dividend income
28
Unrealised (loss) / gain on revaluation of investments classified as held for trading - net Other income
29
1,382,346 162,537 538,445 143,717 1,418,588
173,743
873,512
42,824
(405)
409,191 22,375
343,435
Total non mark-up / interest income
2,635,831 2,874,477
Non mark-up / interest expenses
8,768,958 6,550,296
30
31
7,124,693 – 34,368 6,035,800
739
10,987
Total non mark-up / interest expenses
7,159,061 6,047,526
Extra ordinary / unusual items 1,609,897 – 502,770
–
1,609,897 502,770
Taxation – current
– prior years’
– deferred
561,584 119,827 (150,664)
29,698
(51,043)
109,060
530,747 87,715
Minority interest
1,079,150 (1,152)
415,055
415
1,077,998 338,225 415,470
2,184,967
1,416,223 2,600,437
32
Profit available for appropriation
Basic / diluted earnings per share - Rupees
33
2.12 The annexed notes 1 to 49 form an integral part of these consolidated financial statements.
M. R. Mehkari
Director
Director
0.82
Lt. Gen. Javed Zia
Chairman
page | 133
Rupees in ‘000 Share Capital
Balance as at January 1, 2008
– Capital ReserveRevenue Reserves
Statutory
Reserve
2,835,466 General Un-appropriated
Reserve
profit
4,094,799 – Total
2,184,967 12,121,731
– 415,470
415,470
– (77,245)
–
(681,717)
–
Transfer to:
Statutory reserve
– 77,245 General reserve – – – – – (450,975)
(450,975)
– – (1,052,275)
–
681,717 Final dividend - for the year ended December 31, 2007
declared subsequent to year end Bonus shares declared / issued subsequent
to year ended December 31, 2007 1,052,275 Balance as at January 1, 2009
– 2,912,711 4,776,516 – 338,225 12,086,226
– 1,077,998 1,077,998
– (221,559)
–
(338,225)
–
Transfer to:
Statutory reserve
– General reserve – 221,559 – 338,225 Bonus shares declared / issued subsequent
to year ended December 31, 2008 1,014,693 Balance as at December 31, 2009
5,073,467 – (1,014,693)
3,134,270 4,100,048 – 856,439 13,164,224
M. R. Mehkari
page | 134
Director
Director
–
Lt. Gen. Javed Zia
Chairman
Rupees in ‘000
Note
2009
2008
Cash flow from operating activities
Less: Dividend income
1,609,897 (162,537)
502,770
(173,743)
1,447,360 329,027
Adjustments:
Depreciation
Provision against non-performing advances (net)
Provision for impairment in the value of investments Provision against reverse repo
Bad debts written of directly
Net (profit) / loss on sale of operating fixed assets
Finance charges on leased assets
Provision against other assets
657,184 2,324,377 76,784 82,674 – (4,857)
1,732 – 519,310
3,824,778
508
–
247,360
3,989
1,403
459
3,137,894 4,597,807
(Increase) / decrease in operating assets
Advances
Other assets (excluding advance taxation)
4,585,254 4,926,834
(791,979)
(10,021)
(8,546,036)
(1,016,759)
9,139,389
365,010
(32,109,175)
(2,509,783)
Increase / (decrease) in operating liabilities
Bills payable
Borrowings Deposits and other accounts
Other liabilities (excluding current taxation)
(10,364,795)
(25,114,559)
360,842 4,110,015 38,407,591 87,840 (42,223)
(2,363,377)
24,477,135
1,504,477
42,966,288 23,576,012
Cash flow before tax
Income tax paid
37,186,747 (736,294)
3,388,287
(899,922)
Net cash flow from operating activities
36,450,453 2,488,365
Net investments in available-for-sale securities
Net investments in held-to-maturity securities
Proceeds from issue of share capital to minority share holders
Dividend received
Investments in operating fixed assets - net of adjustment
Sale proceeds of operating fixed assets-disposed off
(31,257,524)
1,108,448 – 154,883 (2,243,197)
18,732 2,477,452
(617,596)
13,000
162,573
(1,874,257)
49,220
Net cash flow (used in) / from investing activities
(32,218,658)
210,392
Receipts / (Payments) of sub-ordinated loans
Lease obligations - net
Dividends paid
2,998,800 (6,762)
(825)
(1,200)
8,899
(444,404)
Net cash flow from / (used in) financing activities
2,991,213 (436,705)
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
34
7,223,008 20,672,482 2,262,052
18,410,430
Cash and cash equivalents at end of the year
27,895,490 20,672,482
Cash flow from investing activities
Cash flow from financing activities
34
M. R. Mehkari
Director
Director
Lt. Gen. Javed Zia
Chairman
page | 135
1.
STATUS AND NATURE OF BUSINESS
The Group consists of Askari Bank Limited, the holding company, Askari Investment Management Limited, a wholly
owned subsidiary company and Askari Securities Limited, a partly owned subsidiary company.
Askari Bank Limited (the Bank) was incorporated in Pakistan on October 09, 1991 as a Public Limited Company and
is listed on the Karachi, Lahore and Islamabad Stock Exchanges. The registered office of the Bank is situated at AWT
Plaza, The Mall, Rawalpindi. The Bank obtained its business commencement certificate on February 26, 1992 and
started operations from April 01, 1992. Army Welfare Trust directly and indirectly holds a significant portion of the
Bank’s share capital at the year end. The Bank has 226 branches (2008: 200 branches); 225 in Pakistan and Azad
Jammu and Kashmir, including 31 Islamic Banking branches, 22 sub-branches and a wholesale bank branch in the
Kingdom of Bahrain. The Bank is a scheduled commercial bank and is principally engaged in the business of banking
as defined in the Banking Companies Ordinance, 1962.
Askari Investment Management Limited (AIML) was incorporated in Pakistan on May 30, 2005 as a public limited
company. AIML is a Non Banking Finance Company (NBFC), under license by the Securities and Exchange Commission
of Pakistan (SECP) to undertake asset management and investment advisory services under the Non-Banking Finance
Companies and Notified Entities Regulations, 2007 (NBFC & NE Regulations). The license was obtained on September
21, 2005. AIML is a wholly owned subsidiary of the Bank with its registered office in Islamabad. AIML obtained its
certificate of commencement of business on September 22, 2005.
Askari Securities Limited (ASL) was incorporated in Pakistan on October 1, 1999 under the Companies Ordinance,
1984 as a public limited company and obtained corporate membership of the Islamabad Stock Exchange on December
24, 1999. The Bank acquired 74% of Ordinary Shares of ASL on October 1, 2007. The principal activity includes share
brokerage, investment advisory and consultancy services. The registered office of the Company is situated at AWT
Plaza, The Mall, Rawalpindi.
The financial statements of AIML and ASL have been consolidated based on their audited financial statements for the
half year ended December 31, 2009.
2.
BASIS OF PRESENTATION
2.1
These consolidated financial statements have been presented in accordance with the requirements of format
prescribed by the State Bank of Pakistan’s BSD Circular No. 4 dated February 17, 2006.
2.2
In accordance with the directives of the Federal Government regarding shifting of the banking system to Islamic
modes, the State Bank of Pakistan (SBP) has issued a number of circulars. One permissible form of trade related mode
of financing comprises of purchase of goods by the Bank from its customers and resale to them at appropriate markup in price on a deferred payment basis. The purchases and sales arising under these arrangements are not reflected
in these financial statements as such but are restricted to the amount of facilities actually utilized and the appropriate
portion of mark-up thereon.
The Bank has adopted IAS 1 (Revised) “Presentation of Financial Statements”, which became effective from January 1,
2009. Surplus / (deficit) on revaluation of land and available for sale investments has been reflected below equity in
terms of requirements of above referred format prescribed by SBP under BSD Circular No. 4 dated February 17, 2006.
Since there are no other components of other comprehensive income that were recognised in equity therefore the
Statement of Other Comprehensive Income has not been prepared. As the change in accounting policy only impacts
presentation aspects, there is no impact on profit for the year.
2.3
The financial results of the Islamic banking branches have been consolidated in these financial statements for reporting
purposes, after eliminating material inter-branch transactions / balances. Key figures of the Islamic banking branches
are disclosed in Annexure II to these consolidated financial statements.
3.
STATEMENT OF COMPLIANCE
These consolidated financial statements have been prepared in accordance with the approved accounting standards
as applicable in Pakistan and the requirements of the Companies Ordinance, 1984 and the Banking Companies
Ordinance, 1962. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS)
issued by the International Accounting Standard Board (IASB) as are notified under the Companies Ordinance, 1984,
provisions of and directives issued under the Companies Ordinance, 1984 and the Banking Companies Ordinance, 1962
or directives issued by the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan. In case
requirements differ, the provisions or directives of the Companies Ordinance, 1984, the Banking Companies Ordinance,
1962 or the requirements of the said directives shall prevail.
page | 136
International Accounting Standard 39, “Financial Instruments: Recognition and Measurement”, International Accounting
Standard 40, “Investment Property” and International Financial Reporting Standard 7,”Financial Instruments:
Disclosure” are not applicable to banking companies in Pakistan. Accordingly, the requirements of these Standards
have not been considered in the preparation of these consolidated financial statements. However, investments have
been presented in accordance with the requirements of the format prescribed by the State Bank of Pakistan’s BSD
Circular No. 4 dated February 17, 2006 and have been classified in accordance with the requirements of BSD Circular
No. 10 dated July 13, 2004..
a)
Standards, amendments and interpretations effective in 2009 but not relevant
The following standards, amendments and interpretations to published standards are mandatory for accounting
periods beginning on or after January 1, 2009 but they are not relevant to the Bank’s operations.
IAS 20
IAS 23
IAS 29
IAS 31
IAS 32
IAS 41
IFRS 5
IFRS 7
IFRIC 15
b)
Accounting for government grants and disclosure of government assistance
Borrowing costs
Financial reporting in hyperinflationary economies
Interest in joint ventures
– Amendments relating to puttable instruments and obligations arising on liquidation
Agriculture
Financial Instruments: Disclosures
Agreements for the construction of real estates
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early
adopted by the bank
Certain minor amendments in following International Accounting Standards (IASs) have been introduced through
IASB’s annual improvements published in April 2009.
IAS 1
Presentation of financial statements
January 1, 2010
IAS 7
Statement of cash flows
January 1, 2010
IAS 17
Leases
January 1, 2010
IAS 36
Impairment of assets
January 1, 2010
IAS 38
Intangible assets
IFRIC 14
c)
IAS 19 – The limit on a Defined Benefit Assets, minimum funding
requirements and their interaction
July 1, 2009
January 1, 2011
Amendments and interpretations to existing standards that are not yet effective and not relevant to the bank’s
operations.
IFRS 1
First-time adoption of International Financial Reporting Standards
January 1, 2010
IFRS 2
Share-based payments
January 1, 2010
IFRS 3
Business combinations
July 1, 2009
IFRS 5
January 1, 2010
IFRS 8
Operating segments
January 1, 2010
IFRS 9
Financial Instruments
January 1, 2013
IAS 24
Related Party Disclosures
January 1, 2011
IAS 27
Consolidated and separate financial statements
IAS 32
– Amendments relating to classification of right issues
July 1, 2009
February 1, 2010
page | 137
IFRIC 9
Reassessment of embedded derivatives
July 1, 2009
IFRIC 16
Hedges of a net investment in foreign operations
July 1, 2009
IFRIC 17
Distribution of non-cash assets to owners
July 1, 2009
IFRIC 18
Transfer of assets from customers
July 1, 2009
IFRIC 19
Extinguishing Financial Liabilities with Equity Instruments
July 1, 2010
4.
BASIS OF MEASUREMENT
These consolidated financial statements have been prepared under the historical cost convention as modified for
certain investments and freehold and leasehold land which are shown at revalued amounts.
The preparation of consolidated financial statements in conformity with approved accounting standards, as applicable
in Pakistan, requires the use of certain accounting estimates and judgments in application of accounting policies. The
areas involving a higher degree of judgments or complexity, or areas where assumptions and estimates are significant
to the financial statements, are disclosed in note 44..
5.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
5.1
The consolidated financial statements include the financial statements of the Bank and its subsidiary companies,
AIML with 100% holding (2008: 100%) and ASL with 74% holding (2008: 74%).
Subsidiaries are those enterprises in which the holding company directly or indirectly controls, beneficially owns or
holds more than 50% of the voting securities or otherwise has the power to elect and appoint more than 50% of its
directors. The financial statements of the subsidiaries are included in the consolidated financial statements from the
date control commences until the date that control ceases.
The assets and liabilities of subsidiary companies have been consolidated on a line by line basis and the carrying value
of investment held by the holding company is eliminated against holding company’s share in paid up capital of the
subsidiaries.
Material intra-group balances and transactions have been eliminated.
Minority interests are that part of net results of the operations and of net assets of the subsidiary attributable
to interests which are not owned by the parent company. Minority interest are presented as separate item in the
consolidated financial statements.
5.2
Cash and cash equivalents
Cash and cash equivalents comprise of cash and balances with treasury banks, balances with other banks and call
money lendings and other short term highly liquid investments that are readily convertible to known amount of cash
and which are subject to insignificant risk of change in value.
5.3
Securities sold under repurchase agreement (repo) are retained in the consolidated financial statements as investments
and a liability for consideration received is included in borrowings. Conversely, consideration for securities purchased
under resale agreement (reverse repo) are included in lendings to financial institutions. The difference between sale
and repurchase / purchase and resale price is treated as mark-up / return expensed and earned, as the case may be.
Repo and reverse repo balances are reflected under borrowings from and lendings to financial institutions respectively.
5.4
Investments
Investments are classified as follows:
Held for trading
These represent securities acquired with the intention to trade by taking advantage of short-term market / interest rate
movements. These are marked to market and surplus / deficit arising on revaluation of ‘held for trading’ investments
is taken to profit and loss account in accordance with the requirements of the State Bank of Pakistan’s BSD Circular
page | 138
Available for sale
These represent securities which do not fall under ‘held for trading’ or ‘held to maturity’ categories. In accordance
with the requirements of the State Bank of Pakistan’s BSD Circular No. 20 dated August 04, 2000, available for sale
securities for which ready quotations are available on Reuters Page (PKRV) or Stock Exchanges are valued at market
value and the resulting surplus / deficit is kept in a separate account and is shown below the shareholders’ equity in
the statement of financial position. Foreign securities are carried at fair value, based on their current bid prices in active
markets. Where the markets are not active or the securities are unlisted, fair value is estimated by using valuation
techniques.
Held to maturity
These represent securities acquired with the intention and ability to hold them upto maturity. These are carried
at amortized cost in accordance with the requirements of the State Bank of Pakistan’s BSD Circular No. 14 dated
September 24, 2004.
The Group holds 15% shares in Askari General Insurance Company Limited (AGICO). For the purposes of consolidated
financial statements, this investment is carried at cost less impairment losses, if any, and has not been accounted
for using equity method since it does not qualify as associate under International Accounting Standards (IAS) 28
‘Accounting for Investment in Associates’ as the Group does not exercise significant influence on AGICO.
Unquoted equity securities are valued at the lower of cost and break-up value. Break-up value of equity securities is
calculated with reference to the net assets of the investee as per the latest audited financial statements. Investments
in the other quoted securities are valued at cost less impairment losses, if any.
All purchases and sale of investment that require delivery within the time frame established by regulations or market
convention are recognized at the trade date, which is the date the Group commits to purchase or sell the investments.
5.5
Advances
Advances are stated net of provisions for non-performing advances. Provision for advances is determined in
accordance with the requirements of the Prudential Regulations issued by the State Bank of Pakistan from time to
time. In addition, a general provision is maintained for advances other than consumer advances as per details given in
note 10.5.2.
The provisions against non-performing advances are charged to the profit and loss account. Advances are written off
when there is no realistic prospect of recovery.
The State Bank of Pakistan has notified for adoption “of Islamic Financial Accounting Standard 2 Ijarah” (IFAS-2) which
is applicable for accounting period beginning on or after January 01, 2009, Consequent to the adoption of IFAS-2, all
such Ijarahs booked on or after January 01, 2009 are stated at cost less accumulated depreciation and impairment if
any, and are shown under “Advances”.
The rentals received / receivable on above Ijarahs are recorded as income / revenue. Depreciation on Ijarah assets is
charged to profit and loss account by applying the straight line method whereby the depreciable value of Ijarah assets
is written off over the Ijarah period. The Bank charges depreciation from the date of delivery of respective assets to
Mustajir upto the date of maturity / termination of Ijarah agreement.
.
5.6
Capital work-in-progress, operating fixed assets and depreciation
Capital work-in-progress is stated at cost.
Owned assets
Fixed assets are stated at cost less impairment losses and accumulated depreciation except for freehold / leasehold
land. Land is carried at revalued amounts which are not depreciated.
Land is revalued by professionally qualified valuers with sufficient regularity to ensure that the net carrying amount
does not differ materially from its fair value. Surplus / (deficit) arising on revaluation of fixed assets is credited /
(debited) to the surplus on revaluation of assets account and is shown below the shareholders’ equity in the statement
of financial position. Except to the extent actually realised on disposal of land which are revalued, the surplus on
revaluation of land shall not be applied to set-off or reduce any deficit or loss, whether past, current of future, or in
any manner applied, adjusted or treated so as to add to the income, profit or surplus of the Bank or utilized directly or
indirectly by way of dividend or bonus.
page | 139
Depreciation is computed over the estimated useful lives of the related assets at the rates set out in note 11.2. The cost
of assets is depreciated on the diminishing balance method, except for vehicles, carpets, renovations and other assets
which are depreciated on a straight line basis. Depreciation is charged for the full month on purchase / acquisition of
an asset while no depreciation is charged in the month of disposal of an asset. Maintenance and normal repairs are
charged to profit and loss account as and when incurred. Major renewals and improvements are capitalized. Gains and
losses on disposal of operating fixed assets are taken to the profit and loss account.
Assets subject to finance lease
Assets held under finance lease are accounted for by recording the assets and related liabilities at the amounts
determined on the basis of lower of fair value of the assets and the present value of minimum lease payments.
Finance charge is allocated to the accounting periods in a manner so as to provide a constant periodic rate of charge
on the outstanding liability. Depreciation is charged on leased assets on the basis similar to that of the owned assets.
Intangible assets
On acquisition of an entity, excess of the purchase consideration over the fair value of identifiable assets and liabilities
acquired, is initially recognised as goodwill and tested for impairment annually.
Membership card of ASL is stated at cost less impairment, if any. The carrying amount is reviewed at the date of
statement of financial position to assess whether it is in excess of its recoverable amount, and where the carrying
value exceeds estimated recoverable amount, it is written down to its estimated recoverable amount.
5.7
Impairment
The carrying amount of the Group’s assets are reviewed at the date of statement of financial position to determine
whether there is any indication of impairment. If such indications exist, the asset’s recoverable amount is estimated
in order to determine the extent of the impairment loss, if any. Impairment loss is recognised as expense in the profit
and loss account. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had
been recognised.
5.8
Taxation
Current
Provision for current tax is the expected tax payable on the taxable profit for the year using tax rates applicable at the
date of statement of financial position and any adjustment to tax payable for previous years.
ASL falls in the ambit of presumptive tax regime regarding commission income under section 233A of the Income
Tax Ordinance, 2001. Provision for income tax is made in the financial statements accordingly. However, provision for
tax on income from transfer of physical shares to CDC and other operating income is based on taxable income at the
prevailing current rates.
Deferred
Deferred tax is provided for by using the balance sheet liability method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for taxation
purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the
carrying amount of assets and liabilities using tax rates enacted or substantially enacted at the date of statement of
financial position, expected to be applicable at the time of its reversal. A deferred tax asset is recognised only to the
extent that it is probable that the future taxable profit will be available and credits can be utilized. Deferred tax assets
are reduced to the extent it is no longer probable that the related tax benefit will be realised.
Deferred tax, on revaluation of investments, if any, is recognised as an adjustment to surplus / (deficit) arising on such
revaluation.
5.9
Staff retirement benefits
Defined benefit plan
The Bank and AIML operates an approved funded gratuity scheme for all its regular employees. Contributions are made
in accordance with the actuarial recommendation. The actuarial valuation is carried out periodically using “Projected
Unit Credit Method”. The actuarial gains / losses in excess of corridor limit (10% of higher of present value of obligation
and fair value of plan assets) are recognized over the expected remaining working life of its employees.
page | 140
ASL operates an unfunded gratuity scheme for all its regular employees. The employees are entitled to gratuity on
completion of three years of continuous service with the Company. The gratuity is payable on the basis of last drawn
basic salary for E-1 grade employees and gross for other employees for each completed year of services.
Defined contribution plan
contributions are made both by the Bank and by the employees at the rate of 8.33% of the basic salary of the employee.
AIML operates a funded staff provident fund scheme as a defined contribution plan for all eligible employees. Equal
monthly contributions are made by the Company and the staff at the rate of 6% of the basic salary of the employee.
ASL operates an unfunded provident fund scheme for all its regular employees for which equal monthly contributions
are made by the Company and the employees at the rate of 10% of basic salary of the employee.
Compensated absences
The Bank grants compensated absences to all its regular employees. Liability for unfunded scheme is recognized on
the basis of actuarial valuation using the “Projected Unit Credit Method”. Provision for the year is charged to profit and
loss account. The amount recognised in the balance sheet represents the present value of defined benefit obligations.
AIML also provides for compensated absences. Obligation under the scheme are charged to income currently.
5.10 Revenue recognition
Mark-up / interest on advances and return on investments is recognised on accrual basis except on classified
advances which is recognized on receipt basis in compliance with Prudential Regulations issued by the State Bank of
Pakistan.
Fees, commission and brokerage income is recognised at the time of performance of service.
Dividend income is recognised when Group’s right to receive the income is established.
Gain and losses on sale of investments are included in income currently.
Management fee is recognised by AIML on the accrual basis, based on annual average net asset value of the Fund
under management.
5.11 Foreign currencies
Foreign currency transactions
Foreign currency transactions are translated into Pak. Rupee at the exchange rates prevailing on the date of transaction.
Monetary assets and liabilities in foreign currencies are translated to Pak. Rupee at the exchange rates prevailing at
the date of statement of financial position. Outstanding foreign bills purchased are valued at the rates applicable to
the remaining maturities. Exchange gains and losses are included in profit and loss account currently.
Foreign operation
The monetary assets and liabilities of wholesale bank branch are translated to Pak. Rupee at exchange rates prevailing
at the balance sheet date. The results of foreign operations are translated at the average rate of exchange for the year.
Translation gains and losses
Translation gains and losses are included in the profit and loss account.
Commitments
Commitments for outstanding forward foreign exchange contracts are valued at the rates applicable to the remaining
maturities. Contingent liabilities / commitments for letters of credits and letters of guarantees denominated in foreign
currencies are translated into Pak. Rupee at the rates of exchange ruling on the date of statement of financial position.
5.12 Provisions
Provisions are recognised when there are present, legal or constructive obligations as a result of past events, it is
probable that an out flow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate of the amounts can be made. Provision for guarantee claims and other off balance sheet obligations
is recognized when intimated and reasonable certainty exists to settle the obligations. Expected recoveries are
recognized by debiting customer accounts. Charge to profit and loss account is stated net off expected recoveries.
page | 141
5.13 Off-setting
Financial assets and financial liabilities are only set-off and the net amount is reported in the consolidated financial
statements when there is a legally enforceable right to set-off the recognised amount and the Group intends either to
settle on a net basis, or to realise the assets and to settle the liabilities simultaneously.
5.14 Appropriations subsequent to the date of statement of financial position
Appropriations subsequent to year end are recognised during the year in which those appropriations are made.
5.15 Operating leases
Leases where significant portion of risks and rewards of the ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged
to profit on a straight line basis over the lease term.
5.16 Segment reporting
A segment is a distinguishable component of the Group that is engaged in providing products or services (business
segment) or in providing product or services within a particular economic environment (geographical segment), which is
subject to risks and rewards that are different from those of other segments. The Group’s primary format of reporting
is based on business segments.
5.16.1 Business segment
Corporate financing
Corporate financing includes corporate and investment banking activities such as mergers and acquisition, underwriting,
privatization, securitisation, IPO’s related activities and secondary private placements.
Trading and Sales
Trading and sales includes the Group’s treasury and money market activities classified as held for trading..
Retail Banking
Retail banking segment provides services to small borrowers and include loans, deposits and other transactions with
retail customers and credit card business.
Commercial Banking
Commercial banking segment provides services related to project finance, export finance, trade finance, leasing, lending,
guarantees, bills of exchange and deposits from corporate customers..
Payment and settlement
Payment and settlement includes income from payments and collections, funds transfer, clearing and
settlement.
Agency services
Agency services include income from rent of lockers provided to customers.
Sub-ordinated loans
It represents Term Finance Certificates issued by the Bank.
5.16.2 Geographical segments
The Bank operates in two geographic regions; Pakistan and the Middle East.
5.17 Functional and presentation currency
Items included in the consolidated financial statements are measured using the currency of the primary economic
environment in which the Group operates. The consolidated financial statements are presented in Pak. Rupee, which
is the Group’s functional currency.
page | 142
Rupees in ‘000
6.
Notes
2009
2008
CASH AND BALANCES WITH TREASURY BANKS
In hand:
Local currency
3,277,104 Foreign currencies
1,095,997 2,843,763
994,256
4,373,101 3,838,019
19,920 15,378
With the State Bank of Pakistan in:
6.1
8,030,082 Foreign currency current account
6.1
1,658,246 Foreign currency deposit account
6.2
4,832,003 6,455,757
1,360,567
3,734,701
National Prize Bonds
14,520,331 11,551,025
With National Bank of Pakistan in :
472,498 625,244
19,385,850 16,029,666
6.1
Deposits are maintained with the State Bank of Pakistan to comply with its requirements issued from time to time.
6.2
These represent statutory cash reserve maintained against foreign currency deposit mobilised under Foreign
Exchange Circular No. 25 issued by the State Bank of Pakistan and is remunerated at the rate 0.0% (2008: 0.0 % per
annum).
Rupees in ‘000
7.
Note
2009
2008
BALANCES WITH OTHER BANKS
In Pakistan
On current accounts
427,020 On deposit accounts
1,078,995 457,505
120,295
Outside Pakistan
On current accounts
1,476,070 On deposit accounts
7.1
5,392,555 656,115
2,733,901
3,967,816
7.1
8,374,640 These represent overnight to three months placements with correspondent banks, carrying interest rates
determined with respect to underlying currency benchmarks at the rates ranging from 0.03% to 0.10% (2008: 0.1%
to 3%) per annum receivable on maturity.
page | 143
Rupees in ‘000
Notes
2009
2008
8.
LENDINGS TO FINANCIAL INSTITUTIONS
Call money lendings 8.1
100,000 675,000
Repurchase agreement lendings (reverse repo) Purchase under resale arrangement of equity securities 8.2
8.3
3,866,733 630,000 2,554,754
1,150,000
4,496,733 3,704,754
35,000 100,000 –
100,000
Less: Provision against reverse repo
4,731,733 (82,674)
4,479,754
–
Lendings to financial institutions - net of provision
4,649,059 4,479,754
Particulars of provision against reverse repo
Opening balance
Charge for the year
Reversals
– 82,674 – –
–
–
82,674 –
Closing balance
82,674 –
8.1
These carry mark-up at 12.6% (2008: 12.5% to 20%) per annum.
8.2
These are secured against underlying Government Securities, the differential between the contracted rate and resale
price is amortised over the period of related contracts and recorded under mark-up/return/interest earned. These
carry mark-up at rates ranging from 12% to 12.4% (2008: 12% to 14.9%) per annum and maturities of upto 3 (2008:
upto 2) months.
8.3
These represent shares of companies purchased under resale arrangements carrying mark-up at rates ranging from
16.5% to 18.01% (2008: 18% to 18.01%) per annum with maturities of upto 1 (2008: upto 1) month. These include lending
under repurchase agreement amounting to Rs. Nil (2008: Rs. 500,000 thousand) to a related party.
8.4
These represent term deposit for a term of 100 days and will mature on January 1, 2010. This term deposit carries
mark-up at rate 11.25% per annum. The deposit is pledged with MCB Bank Limited, Islamabad against running finance
facility of Rs. 31,500 thousand available to AIML.
Term deposits with MCB Bank Limited 8.4
Others
Rupees in ‘000
2009
2008
8.5
Particulars of lending
In local currency In foreign currencies 4,731,733 – 4,479,754
–
4,731,733 4,479,754
2009
Held by
Rupees in ‘000
the Bank
Further
given as
Held by
collateral
Total
the Bank
2008
Further
given as
collateral
Total
8.6 Securities held as collateral against
lendings to financial institutions
Purchase under resale arrangement of listed shares
3,631,733 235,000 – – 3,631,733 235,000 630,000 – 4,496,733 – page | 144
2,554,754 – – – 2,554,754
–
630,000 1,150,000 – 1,150,000
4,496,733 3,704,754 – 3,704,754
9.
INVESTMENTS
2009
Rupees in ‘000
Notes
Given as
collateral
Total
9.1
Held by
the Bank
Held by
the Bank
2008
Given as
collateral
Total
Investments by types:
167,270 – Available for sale securities
Market Treasury Bills 33,556,454 4,186,443 Pakistan Investment Bonds 4,645,193 336,807 Fully paid ordinary shares
2,729,146 – Fully paid preference shares
9.5
95,000 – Askari Income Fund - Units 9.7
888,668 – Askari Islamic Income Fund 9.7
100,000 – Askari Islamic Asset Allocation Fund 9.7
100,000 – Term Finance Certificates
13,481,689 – National Investment Trust (NIT) Units
278,472 – National Investment Trust (NIT)
Government Bond Fund
100,000 – Sukuk - Certificates
9.8
1,511,289 – Foreign securities
9.9
195,965 – 57,681,876 4,523,250 167,270 134,469 – 134,469
37,742,897 4,982,000 2,729,146 95,000 888,668 100,000 100,000 13,481,689 278,472 15,276,144 3,086,099 1,868,417 125,000 986,265 100,000 100,000 6,707,845 196,955 767,310 44,000 – – – – – – – 16,043,454
3,130,099
1,868,417
125,000
986,265
100,000
100,000
6,707,845
196,955
– – – –
1,508,280
181,287
100,000 1,511,289 195,965 – 1,508,280 181,287 62,205,126 30,136,292 781,702 1,133,369 1,261,681 167,306 897,508 421,208 1,029,907 1,516,837 948,676 949,330 930,979 395,493 –
–
–
–
–
–
1,029,907
1,516,837
948,676
949,330
930,979
395,493
– 4,662,774 5,771,222 – 5,771,222
Investment in associate
Askari General Insurance Company Limited 9.10
11,182 – 11,182 11,182 – 11,182
Investment at cost 62,523,102 4,523,250 Less: Provision for impairment in value
of investments in 9.2.2
– unlisted shares
(5,680)
–
– Sukuk certificates
(75,000)
–
67,046,352 36,053,165 Investments (net of provision)
62,442,422 4,523,250 Add / (less):
Unrealised (deficit) / surplus on revaluation
of held for trading securities - net
(405)
– (Deficit) / surplus on revaluation of available
for sale securities - net
(71,646)
(8,004)
66,965,672 36,049,269 (405)
22,375 (79,650)
(1,413,392)
(4,590)
(1,417,982)
66,885,617 34,658,252 806,720 35,464,972
Held to maturity securities
781,702 –
Pakistan Investment Bonds 1,133,369 –
Government of Pakistan Sukuk - Bonds
9.2.4
1,261,681 –
9.2.4
167,306 –
9.11
897,508 –
Credit Linked Notes
9.12
421,208 –
Total investments at market value 4,662,774 62,370,371 4,515,246 (5,680)
(75,000)
(3,896)
– 811,310 30,947,602
811,310 – – 811,310 – 36,864,475
(3,896)
–
36,860,579
22,375
page | 145
Rupees in ‘000
9.2
Notes
2009
2008
Investments by segments:
9.2.3
Pakistan Investment Bonds Government of Pakistan Sukuk Bonds
9.2.4
9.2.4
Government of Pakistan Sukuk Certificates
37,742,897 6,115,369 1,261,681 167,306 617,508 16,043,454
4,646,936
948,676
949,330
660,979
45,904,761 23,249,375
3,940,586 55,680 3,144,653
55,680
3,996,266 3,200,333
9.5
95,000 125,000
9.6
Listed Term Finance Certificates Unlisted Term Finance Certificates
1,647,656 12,615,735 1,252,367
6,485,385
14,263,391 7,737,752
195,965 421,208 181,287
395,493
617,173 576,780
Other Investments
National Investment Trust (NIT) - Units
1,791,289 278,472 100,000 1,778,280
196,955
–
2,169,761 1,975,235
Total investment at cost Less: Provision for impairment in value of investments
in unlisted shares
9.2.1
67,046,352 36,864,475
(80,680)
(3,896)
Investments (net of provisions)
(Less) / add: Unrealised (deficit) / surplus on revaluation of held
for trading securities - net
Less: Deficit on revaluation of available for sale securities - net
66,965,672 36,860,579
(405)
(79,650)
22,375
(1,417,982)
66,885,617 35,464,972
3,388
Fully paid up ordinary shares / units
Listed companies / funds
Unlisted companies
9.3
9.4
Listed companies
Foreign Securities
9.9
Credit Linked Notes
9.12
Total investments at market value 9.2.1 Particulars of provision for impairment in value of investments
Opening balance
3,896 Charge for the year
Reversals 76,784 – 508
–
76,784 508
80,680 3,896
Available for sale securities
Fully paid ordinary shares - unlisted company
Sukuk certificates
5,680 75,000
3,896
–
80,680
3,896
Closing balance
9.2.2 Particulars of provision in respect of type and segment
page | 146
9.2.3 Principal terms of investments in Federal Government Securities
Name of investment
Maturity
Principal Payment Rate
Coupon
Payment
February 2010 to December 2010 On maturity 11.42% to 13.9%
at maturity
December 2010 to September 2019 On maturity 8% to 14%
semi-annually
Government of Pakistan Sukuk Bonds
January 2010 On maturity 6 months LIBOR plus 2.2%
semi-annually
7.13%
semi-annually
Sukuk Certificates
March 2016 On maturity – House Building Finance Corporation
May 8, 2014 Semi-annually 6 months KIBOR
plus 1%
– Pakistan Domestic Sukuk Company Ltd. September 26, 2011 On maturity semi-annually
Weighted average semi-annually
yield of 6 months
market treasury
bills
– Karachi Shipyard and Engineering Works February 04, 2016 Semi-annually 6 months KIBOR
plus 0.4%
semi-annually
– Sui Southern Gas Company Limited
June 28, 2012 Semi-annually 6 months KIBOR
plus 0.8%
semi-annually
– WAPDA
July 13, 2017 On maturity semi-annually
6 months KIBOR
minus 0.25%
9.2.4 These represent investments by the wholesale bank branch.
9.3
Investments in listed Companies shares / Units
Paid-up value
per share/
certificate/unit
2009
– 584,200 – 1,758,701 75,000 41,000 – 1,300,000 2,500,000 3,056,611 8,854,660 1,000,000 1,000,000 1,009,971 500,000 10,257,114 235,620 260,000 299,520 2,757,095 3,850,000 – 1,059,304 – – 364,061 1,133,300 1,924,902 – – – – – – 2008
5,000,000 100,086 970 – 3,387 40,881 888 1,107,159 2,500,000 3,056,611 9,798,740 1,000,000 1,000,000 – 500,000 6,350,000 54,300 101,455 632 595 462,939 202 181,165 61 11,320 113,400 798,243 49,352 701 86 524 81,771 21,124 3,575 Rupees
– 83.83 – 6.42 61.56 1.05 – 39.86 98.06 3.66 106.01 100.00 100.00 99.01 4.85 4.19 52.60 331.90 144.18 26.95 13.58 – 5.87 – – 12.55 33.30 31.70 – – – – – – Name of companies / mutual funds
ABL Income Fund
Allied Bank Limited
Arif Habib Limited
Askari General Insurance Company Limited – note 9.10
Askari Income Fund
Atlas Bank Limited
Atlas Fund of Funds
Attock Cement Pakistan Limited
Azgard Nine Limited
BOC Pakistan Bosicor Pakistan Limited
Cherat Cement Company Limited
2009
2008
Rupees in ‘000
– 48,972 – 11,295 4,617 43 – 51,814 245,141 11,182 938,667 100,000 100,000 100,000 2,427 42,934 12,393 86,295 43,186 74,293 52,265 – 6,218 – – 4,569 37,736 61,029 – – – – – – 50,000
29,380
3
–
114
42
66
76,499
245,141
11,182
986,265
100,000
100,000
–
5,256
57,514
3,985
42,518
41
11
14,771
5
2,899
7
37
3,279
64,821
1,126
9
1
23
279
20
29
page | 147
Paid-up value
per share/
certificate/unit
2009
– 534,086 – 3,000,000 1,600,000 – – – 1,108,005 600,000 – 1,886,187 509,342 3,900,000 – 5,400,000 130,000 – 3,585,000 – 1,000,000 – 1,038,000 6,231,000 – 1,760,093 1,239,613 1,830,000 – 335,000 – 6,000,000 1,610,000 2,100,000 1,300,000 240,000 150,000 10,726,500 1,300,000 200,000 575,000 – 513,300 7,511,000 546,313 – 650,000 553,675 100,000 – 2,800,000 – 1,800,000 4,181,800 – 2,059,900 – 100,568 1,700,000 – 139,700 – 3,284,204 page | 148
2008
151 113,112 480 969,606 2,213,915 1,827 6,280 75 730,000 219,392 100,000 1,172,187 156,927 1,613,280 6,195 1,500,000 50,029 156 7,428 2,452 189,941 254,814 261 – 6,090 140,000 1,034,336 1,077 69 4,704 516,899 743,500 204,809 640,000 347,946 110,000 1,865 4,300,000 137,500 6,204 587,974 13,812 300,000 7,508,500 218,700 556 882,599 187,380 153,906 4,234 228,201 7,917 1,427,000 1,033,719 4,000 1,696,825 352 100,568 650,000 30 60,875 2,483 2,018,600 Rupees
– 138.08 – 8.44 26.13 – – – 3.18 114.52 – 4.18 20.82 20.84 – 3.53 189.19 – 27.70 – 5.08 – 17.18 4.72 – 38.25 62.98 4.42 – 145.37 – 6.00 14.45 5.69 73.64 198.03 29.34 6.03 10.80 71.50 71.23 – 144.00 10.00 108.24 – 142.74 146.55 6.50 – 34.93 – 5.05 18.64 – 16.00 – 39.67 4.33 – 247.86 – 11.07 Name of companies / mutual funds
Faysal Bank Limited
Habib Bank Limited
HBL Stock Fund
Honda Atlas Cars (Pakistan) Limited
JS Bank Limited
JS Income Fund
JS Value Fund
MCB Bank Limited
Meezan Bank Limited
MyBank Limited
NIB Bank Limited
Packages Limited
Pakistan Re-Insurance Company Limited
PICIC Growth Fund
Samba Bank Limited
Soneri Bank Limited
2009
2008
Rupees in ‘000
– 73,744 – 25,324 41,808 – – – 3,525 68,713 – 7,878 10,606 81,281 – 19,062 24,595 – 99,299 – 5,080 – 17,837 29,385 – 67,318 78,074 8,096 – 48,698 – 36,016 23,264 11,952 95,733 47,526 4,401 64,647 14,039 14,300 40,958 – 73,915 75,091 59,133 – 92,779 81,139 650 – 97,809 – 9,088 77,963 – 32,952 – 3,990 7,363 – 34,626 – 36,356 18
25,027
14
11,109
85,485
102
85
4
3,371
50,751
10,000
14,652
8,455
47,006
457
17,151
16,931
1
417
28
1,999
25,000
10
–
17
6,023
48,950
3
7
636
50,000
7,029
6,104
13,404
45,974
34,643
51
85,961
3,562
136
41,820
148
92,663
75,069
61,724
14
101,311
35,161
1,782
365
13,846
1,229
13,601
25,184
27
45,056
7
5,000
10,083
2
19,108
40
71,557
Paid-up value
per share/
certificate/unit
2009
2,521,800 1,718,264 – – 6,100 830,000 – 2008
1,234,728 5,901 62 3,641 – 310,511 2,380,000 2009
Rupees
Name of companies / mutual funds
36.70 13.72 – – 99.18 51.52 – Sui Northern Gas Pipelines Limited
The Bank of Punjab
United Bank Limited
2008
Rupees in ‘000
92,562 23,569 – – 605 42,761 – 65,890
69
1
55
–
30,208
17,737
Add / (less): Surplus / (deficit) on revaluation of shares - (net)
3,940,586 89,447 3,144,653
(1,054,874)
Market value as on December 31
4,030,033 2,089,779
9.4
Particulars of investments held in unlisted companies
Cost / paid-up Percentage
Number value per
Investee
Notes
of holding
of shares
share
Total paid-up Break up
value
value
Rupees
Based on
audited
financial
statements Name of
as at
Chief Executive
Rupees in ‘000 Khushhali Bank Limited
9.4.1
2.93 5,000,000 10 50,000 Pakistan Export Finance Guarantee Agency
Limited – a related party
9.4.2
5.26 568,044 10 5,680 55,130 31 Dec 2008 Mr. M.Ghalib Nishtar
– – Mr. S.M. Zaeem
55,680
9.4.1 This represents subscription by the Bank towards capital of Khushhali Bank as per the State Bank of Pakistan letter
No. BSD (RU-26/625-MfB/13317/00) dated August 07, 2000. In accordance with the restrictions imposed under
section 10 of the Khushhali Bank Ordinance, 2000, the sale/ transfer of these shares is subject to the prior approval of
the State Bank of Pakistan.
9.4.2 The difference between the paid up value and break up value of Pakistan Export Finance Guarantee Agency Limited
amounting to Rs. 5,680 thousand (2008: Rs. 3,896 thousand) is considered as impairment and has been fully provided
for.
9.5
Particulars of investments held in preference shares - Listed
No. of preference shares
2008
per share Investee
Rate %
Rupees
Rupees in ‘000 Rupees in ‘000 10
Chenab Limited
2009
Paid-up
valueBook ValueMarket Value
10,000,000 10,000,000 2,500,000 2,500,000 10 Masood Textile Mills Limited
2009
2008
2009
2008
9.25
70,000 100,000 70,000 81,700
Average of ask side of six
month KIBOR plus 2 percent
per annum
25,000
25,000 25,000 25,000
95,000 125,000 95,000 106,700
page | 149
9.6
Investment in Term Finance Certificates
No. of certificates
Company’s Name
2009
2008
Redeemed value per certificate Rupees 2009
Rupees in ‘000
2008
Listed
13,669 35,000 30,000 11,000 27,400 8,000 37,230 – 40,000 4,600 12,000 10,000 29,000 84,090 18,669 35,000 30,000 – 5,000 8,000 15,000 43,493 40,000 4,600 12,000 10,000 24,431 6,067 Allied Bank Limited
NIB Bank Limited
Orix Leasing Limited
Pakistan Mobile Communication (Private) Limited
Royal Bank of Scotland
Soneri Bank Limited
Standard Chartered Bank Limited United Bank Limited
4,994 4,991 4,990 2,446 4,521 4,208 4,621 – 4,993 4,991 4,991 4,993 5,656 4,780 Book value as on December 31
Unlisted
30,000 15,200 86,000 86,000 70,000 – 20,000 20,000 140,000 140,000 233,333 233,333 233,333 233,333 233,333 233,333 74,900 33,000 10,000 10,000 5,000 5,000 455,800 – 2,200 2,200 140,000 140,000 68,493 – 642,800 – 50,000 70,000 10,000 10,000 – 59,023 Avari Hotels Limited
(Chief Executive: Mr. Byram Dinshawji Avari)
Azgard Nine Limited
(Chief Executive: Mr. Ahmed H. Shaikh)
(Chief Executive: Mr. Shakil Sadiq)
Dewan Farooq Spinning Mills Limited
(Chief Executive: Mr. Dewan Abdul Baqi Farooqui)
Engro Chemicals Pakistan Limited
(Chief Executive: Mr. Asad Umar)
(Chief Executive: Mr. Tanwir Safder Cheema)
(Chief Executive: Mr. Muhammad Ibrahim Majoka)
(Chief Executive: Mr. Raja Abdul Ghafoor)
(Chief Executive: Mr. Munaf Ibrahim)
(Chief Executive: Mr. Farrukh H. Sabzwari)
Kashf Foundation
(Chief Executive: Ms. Sadaffe Abid)
(Chief Executive: Mr. Ameer-ur-Rehman)
(Chief Executive: Mr. Humayun Murad)
Pak American Fertilizers Limited (Chief Executive: Mr. Ahmed Jaudet Bilal)
(Chief Executive: Mr. Fawad Ahmad Mukhtar)
(Chief Executive: Mr. Fazeel Asif)
(Chief Executive: Mr. Aijaz Haroon)
(Chief Executive: Mr. Ahsan M. Saleem)
(Chief Executive: Mr. Baber Ali Syed)
68,263 174,693 149,700 26,908 123,871 33,661 172,051 – 199,720 22,959 59,892 49,930 164,030 401,978 1,647,656 1,252,367
5,000 150,000 76,000
5,002 430,194 430,387
5,000 350,000 –
1,250 25,000 25,000
5,000 700,000 700,000
5,000 1,166,665 1,166,665
5,000 1,166,665 1,166,665
5,000 1,166,665 1,166,665
4,808 360,106 165,744
5,022 50,222 50,370
2,143 10,714 25,000
5,000 2,279,000 –
100,023 220,050 220,070
4,997 699,580 699,800
4,773 326,924 –
5,000 3,214,000 –
4,999 249,950 247,907
5,000 50,000 50,000
– – Book value as on December 31
These carry rate of return ranging from 8.45% to 19.43% (2008: 8.45% to 19.43%) per annum and having maturity periods of upto 10 years
(2008: 8 years).
page | 150
93,270
174,760
149,760
–
21,121
40,548
74,985
212,990
199,800
22,968
59,916
49,950
121,988
30,311
12,615,735 295,112
6,485,385
9.7
This represents investment in Funds managed by Askari Investment Management Limited; a wholly owned
subsidiary of the Bank.
9.8
Sukuk Certificates - Available for sale
Name of Investee
Rate
Maturity
2009
Eden Builders Private Limited
House Building Finance Corporation
JDW Sugar Mills Limited
K.S. Sulmanji and Esmailiji and
Sons Private Limited
Kohat Cement Limited
Pak Electron Limited
Pakistan Domestic Sukuk Company Limited
Shahraj Fabric Limited
Weighted average yield of
6 months market treasury bills
March 8, 2014
120,000 66,250
90,000 100,000
June 20, 2014
200,000 200,000
June 28, 2012
190,000 200,000
December 13, 2012
241,500 241,500
August 5, 2015
300,000 300,000
September 28, 2012
19,789 50,530
September 26, 2011
10,000 10,000
December 31, 2012
150,000 150,000
August 19, 2013
190,000 190,000
1,511,289 1,508,280
May 8, 2014
9.9
2008
Rupees in ‘000
The Bank has invested in MENA Transformation Fund I.L.P a closed ended fund having six year term.
9.10 Investment in associate represents 15% (2008: 15%) investment in the equity of Askari General Insurance Company
Limited, a listed associated company (market value as at December 31, 2009: Rs. 51,962 thousand; 2008: Rs. 91,668
thousand).
Audited financial statements of AGICO for the year ended December 31, 2009 were not available, however the
summarized financial position and results as per the most recent available financial statements as at September 30,
2009 are as follows:
Rupees in ‘000
Total Assets Total Liabilities Net Assets
1,346,592
1,103,843
242,749
Total revenue and loss after tax for the nine months ended September 30, 2009 were Rs. 22,761 thousand and
Rs. 53,207 thousand respectively.
9.11 Sukuk Certificates - Held to maturity
Name of Investee
Rate
Maturity
Arzoo Textile Limited
Educational Excellence Limited
Karachi Shipyard and Engineering Works
WAPDA
6 month KIBOR minus 0.25% p.a.
2009
2008
Rupees in ‘000
April 14, 2014
110,000 110,000
November 19, 2013
270,000 270,000
February 04, 2016
150,842 150,979
June 28, 2012
166,666 200,000
July 13, 2017
200,000 200,000
897,508 930,979
9.12 This represents investments by the wholesale bank branch in credit linked notes issued by Standard Chartered Bank,
Singapore at 3 months USD LIBOR plus 3.50% per annum maturing on December 20, 2012.
page | 151
9.13 Quality of Available for Sale Securities
20092008
Rupees in ‘000
Market Value Rating Market Value Market Treasury Bills – note 9.13.1
Pakistan Investment Bonds – note 9.13.1
Fully paid up ordinary shares – note 9.13.2
ABL Income Fund
Allied Bank Limited
Arif Habib Limited
Atlas Bank Limited
Atlas Fund of Funds
Attock Cement Limited
Azgard Nine Limited
Cherat Cement Limited
Faysal Bank Limited
Habib Bank Limited
HBL Stock Fund
Honda Atlas Cars Limited
page | 152
37,693,814 4,943,072 – 68,949 – 11,607 – 275 – 64,051 157,359 111,247 113,119 104,002 1,720 36,310 12,252 90,381 29,589 56,133 45,441 – 6,218 – – 4,569 29,477 62,675 – – – – – – – 92,368 – 18,480 41,808 – – – 3,324 74,064 – 5,470 9,739 121,212 – 19,062 25,548 – 101,787 – unrated
unrated
–
AA –
unrated
–
A
–
unrated
unrated
unrated
unrated
unrated
A– unrated
unrated
unrated
AA A+ AA –
A
–
–
unrated
A+
unrated
–
–
–
–
–
–
–
AA –
unrated
unrated
–
–
–
4 - Star
AA+ –
unrated
unrated
unrated
–
A
unrated
–
AA+ –
16,028,763 2,901,990 52,083 10,193 3
– 106 226 76 21,205 114,874 100,000 100,000 – 1,660 31,750 2,046 14,645 38 10 7,745 5
1,313 7
53 1,294 13,594 1,050 10 1
26 248 30 28 20 10,905 16 4,557 28,560 107 72 4
1,489 16,424 5,798 2,649 1,808 22,731 426 4,725 6,148 1
388 22 Rating
unrated
unrated
A
AA
unrated
–
A
A
unrated
A+
unrated
unrated
unrated
–
A–
unrated
unrated
unrated
AA
A+
AA
AA
A–
unrated
unrated
unrated
A+
unrated
unrated
unrated
unrated
BB
unrated
unrated
AA
AA
unrated
unrated
unrated
unrated
AA
A–
5 - Star
AA+
unrated
unrated
unrated
unrated
unrated
A
unrated
BBB–
AA+
BB+
20092008
Rupees in ‘000
Market Value Rating Market Value JS Bank Limited
JS Income Fund
JS Value Fund
MCB Bank Limited
Meezan Bank Limited
MyBank Limited
NIB Bank Limited
Packages Limited
Pakistan Export Finance Guarantee Agency Limited
Pakistan Re-Insurance Limited
PICIC Growth Fund
Samba Bank Limited
Soneri Bank Limited
The Bank of Punjab
United Bank Limited
Chenab Limited
Masood Textile Mills Limited
Askari Income Fund Units – note 9.13.2
5,080 – 14,916 28,663 – 50,000 80,735 75,488 6,881 – 71,396 – 36,600 25,341 9,975 78,089 42,437 – 51,487 27,560 – 60,836 – 73,915 78,866 48,600 – – 138,462 91,003 595 – 73,080 – 7,992 73,809 – 29,374 – 3,990 5,627 – 34,975 – 36,356 62,496 23,076 – – 624 46,760 – A
–
AA– unrated
–
A– unrated
unrated
D
–
AA+ –
unrated
A+ A– AAA
AAA –
AA– unrated
–
AAA –
AA
AA–
unrated
–
–
unrated
unrated
3 - Star
–
unrated
–
4 - Star
unrated
–
2 - Star –
unrated
A
–
unrated
–
AA– AA AA– –
–
A+ AA+ –
70,000 25,000 888,668 unrated
unrated
3 - Star 1,090 25,701 11 – 27 50,000 4,418 9,710 4
7
592 51,013 2,952 4,399 7,424 17,005 10,468 47 20,081 1,330 140 24,404 119 24,357 56,464 17,411 13 1,784 9,490 18,854 311 417 5,406 1,145 3,254 17,460 14 9,485 8
4,735 3,211 2
18,890 45 22,205 26,497 62 1
48 – 11,461 5,474 81,700 25,000 921,376 Rating
A–
5 - Star
AA–
–
5 - Star
A–
unrated
unrated
BBB+
unrated
AA+
unrated
5 - Star
A+
A
AAA
AAA
unrated
AA–
unrated
A+
AAA
A+
AA
AA–
unrated
A
unrated
unrated
unrated
5 - Star
unrated
unrated
AAA
4 - Star
unrated
unrated
unrated
BBB
unrated
A
BBB
unrated
unrated
AA–
AA
AA–
unrated
AA–
–
AA+
4 - Star
unrated
unrated
5 - Star
page | 153
20092008
Rupees in ‘000
Market Value Rating Market Value Rating
Allied Bank Limited
Avari Hotels Limited
Azgard Nine Limited
Engro Chemical Pakistan Limited
Kashf Foundation
NIB Bank Limited
United Bank Limited
World Call Telecom Limited
66,145 140,730 425,853 344,550 665,216 1,166,665 1,166,665 27,311 1,166,665 376,333 49,224 10,540 2,279,000 125,659 228,147 180,565 685,864 321,373 249,950 3,214,000 44,037 61,510 387,431 AA– A– AA– AA– AA unrated unrated A+ unrated AA+ AA– A– unrated A+ AA & AA+ A+ AA– AA unrated unrated D
AA A
101,858 76,000 431,675 – 704,200 1,166,665 1,166,665 – 1,166,665 166,418 50,370 25,078 – 24,995 260,768 74,985 700,550 217,422 – – 50,000 23,943 329,998 AA–
A–
AA–
–
AA
unrated
unrated
–
unrated
AA+
AA–
A–
–
A+
AA+
AA–
AA–
AA
–
–
A–
AA
AA–
13,383,433 6,738,255
National Investment Trust (NIT) Units
Sukuk Certificates
Foreign securities
262,601 101,335 1,510, 362 3 - Star
unrated
unrated
79,705 – 1,508,280 4 - Star
–
unrated
228,191 unrated
170,040 unrated
62,119,796 29,525,724
9.13.1 These are Government of Pakistan guaranteed securities.
9.13.2 Ratings for these equity securities / units represent ‘Entity Ratings’.
9.13.3 Local securities have either been rated by ‘The Pakistan Credit Rating Agency Limited (PACRA) or ‘JCR-VIS Credit
Rating Company Limited (JCR-VIS), whereas foreign security is unrated. These ratings reflect independent credit risk
assessment by respective credit rating entities.
9.14 The Bank recognised impairment loss arising on valuation of listed equity portfolio held as available for sale on
December 31, 2008 as part of equity in terms of the options permitted by the State Bank of Pakistan’s BSD Circular
No. 4 dated February 13, 2009. The said loss amounted to Rs. 440,866 thousand as of December 31, 2008 reduced to
Rs. 285,373 thousand due to price changes during 2009 and was charged to profit and loss account on a quarterly basis
during 2009, as permitted by the above referred circular. In addition, continuing with the impairment policy followed
by the Bank, an amount of Rs. 145,684 thousand has also been recognised as impairment of available for sale equity
portfolio.
page | 154
Rupees in ‘000
2009
2008
9.15 Unrealized (loss) / gain on revaluation of investments
(405)
22,375
9.16 Market Treasury Bills, Pakistan Investment Bonds and Federal Investment Bonds are securities eligible for rediscounting with the State Bank of Pakistan.
9.17 Investments given as collateral include securities having book value of Rs. 44,000 thousand pledged with the State
Bank of Pakistan as security against demand loan and TT / DD discounting facilities.
Rupees in ‘000
10.
Notes
2009
2008
ADVANCES
Loans, cash credits, running finances, etc.
In Pakistan
Outside Pakistan
126,000,719 2,106,040 120,029,501
2,993,878
Ijarah Financing - In Pakistan
10.2
128,106,759 1,635,158 123,023,379
2,092,884
281,514 –
9,582,481 8,027,833 5,737,310
8,865,648
Net book value of assets / investments in Ijarah
under IFAS 2 in Pakistan
10.3
Bills discounted and purchased (excluding treasury bills)
Payable in Pakistan
17,610,314 14,602,958
Financing in respect of continuous funding system
147,633,745 – 139,719,221
111,752
147,633,745 139,830,973
10.5
Specific provision
General provision
General provision against consumer financing
(11,658,161)
(585,642)
(350,041)
(10,025,157)
(573,390)
(414,184)
(12,593,844)
(11,012,731)
135,039,901 128,818,242
10.1.1 In local currency
139,019,994 8,613,751 130,774,111
9,056,862
147,633,745 139,830,973
10.1.2 Short term ( for upto one year)
Long term ( for over one year)
119,376,427 28,257,318 111,043,274
28,787,699
147,633,745 139,830,973
Advances - gross
Advances - net of provision
10.1 Particulars of advances
page | 155
10.2 Ijarah Financing - In Pakistan
2009
2008
Not
later than
Rupees in ‘000
one year
Later than
one and less
Not
than five Over five
later than
years
years
Total
one year
Later than
one and less
than five
years
Over five
years
Total
Ijarah rentals receivable Residual value 498,190 65,374 995,460 419,405 – 1,493,650 – 484,779 651,713 6,520 1,468,852 536,621 – 2,120,565
– 543,141
Minimum lease payments Profit for future periods 563,564 124,240 1,414,865 219,031 – 1,978,429 – 343,271 658,233 222,807 2,005,473 348,015 – 2,663,706
– 570,822
Present value of minimum Ijarah payments 439,324 1,195,834 – 1,635,158 435,426 1,657,458 – 2,092,884
10.3 Net book Value of assets / investments in Ijarah under IFAS 2
2009
2008
Not
later than
Rupees in ‘000
one year
Later than
one and less
Not
than five Over five
later than
years
years
Total
one year
Later than
one and less
than five
years
Over five
years
Total
Assets acquired under Ijarah
Accumulated depreciation on Ijarah
– – 320,088 38,574 – – 320,088 38,574 – – – – – – –
–
Net assets / investment in Ijarah
– 281,514 – 281,514 – – – –
10.4 Advances include Rs. 17,725,451 thousand (2008: Rs. 11,689,417 thousand) which have been placed under nonperforming status as detailed below::
Category of classification
2009
Classified Advances
Domestic Overseas Provision Required
Total Domestic Overseas Provision Held
Total Domestic Overseas Total
Rupees in ‘000
Other Assets Especially
mentioned – note 10.4.1
Substandard
Doubtful
Loss
73,966 639,784 3,490,038 13,521,663 –
–
–
–
17,725,451 – 17,725,451 11,658,161 73,966 – 639,784 155,630 3,490,038 688,926 13,521,663 10,813,605 –
–
–
–
– – 155,630 155,630 688,926 688,926 10,813,605 10,813,605 – 11,658,161 11,658,161 –
– 155,630
– 688,926
– 10,813,605
– 11,658,161
10.4.1 This represents classification made for agricultural finances.
2009
2008
Consumer
Consumer
financing
financing
Rupees in ‘000
Specific
General
-General
Total
Specific
General
-General
Opening balance
10,025,157 573,390 414,184 11,012,731 Charge for the year
Reversal for the year
3,639,565 (1,263,297)
221,248 (208,996)
Net charge / (reversal) for the year
Amounts written off – note 10.7
2,376,268 (743,264)
Closing balance
11,658,161 12,252 – 585,642 6,528,040 Total
434,690 445,875 2,146 3,862,959 5,450,215 (66,289) (1,538,582) (1,732,446)
138,700 – 4,993 5,593,908
(36,684) (1,769,130)
(64,143) 2,324,377 – (743,264)
138,700 – (31,691) 3,824,778
– (220,652)
573,390 414,184 11,012,731
3,717,769 (220,652)
350,041 12,593,844 10,025,157 7,408,605
10.5.1 The State Bank of Pakistan has amended the Prudential Regulations vide BSD Circular No. 10 of 2009 dated October
20, 2009 in relation to provision for loans and advances, thereby allowing benefit of 40% of Forced Sale Value (FSV) of
pledged stocks, mortgaged residential, commercial and industrial properties (land and building only) held as collateral
against non-performing advances. The FSV benefit has resulted in reduced charge for specific provision for the year
by Rs. 2,814,106 thousand. The FSV benefit recognised in these financial statements is not available for payment of
page | 156
cash or stock dividend. Had the FSV benefit not recognised, profit before tax for the year and profit after tax for the
year would have been lower by Rs. 2,814,106 (2008: 685,843) thousand and Rs. 1,829,169 (2008: 445,800) thousand
respectively.
10.5.2 The general provision is maintained at the rate of 0.5% on advances other than non-performing advances and consumer
financing.
2009
2008
Consumer
Consumer
financing
financing
Rupees in ‘000
Specific
General
-General
Total
Specific
General
-General
In local currency In foreign currencies
Total
11,448,001 210,160 544,082 41,560 350,041 12,342,124 – 251,720 9,927,604 97,553 529,336 44,054 414,184 10,871,124
– 141,607
11,658,161 585,642 350,041 12,593,844 10,025,157 573,390 414,184 11,012,731
Rupees in ‘000
2009
2008
10.7 Particulars of write-offs:
10.7.1 Against provisions
Directly charged to profit and loss account
743,264 – 220,652
247,360
743,264 468,012
10.7.2 Write offs of Rs. 500,000 and above
Write offs of below Rs. 500,000
742,967 297 467,963
49
743,264 468,012
10.8 In terms of sub-section (3) of Section 33A of the Banking Companies Ordinance, 1962 the statement in respect of
written off loans or any other financial relief of Rs. 500,000 or above allowed to a person(s) during the year ended
December 31, 2009 is given at Annexure-I.
Rupees in ‘000
2009
2008
10.9 Particulars of loans and advances to directors, associated companies etc.
Debts due by directors, executives or officers of the Bank or any of them either severally or jointly with any other persons
196,898
298,558
(92,950)
Debts due by companies or firms in which the directors of the
Bank are interested as directors, partners or in the case of
private companies as members
Balance at beginning of year Loans granted during the year Repayments – – – –
–
–
Balance at end of year – –
Debts due by subsidiary companies, controlled firms,
managed modarabas and other related parties
193,454
500,000
(61,550)
1,192,749 1,034,410
page | 157
Rupees in ‘000
11.
OPERATING FIXED ASSETS
Property and equipment
Intangible assets Notes
2009
11.1
11.2
11.3
2008
1,489,772 8,392,779 34,641 1,237,010
7,073,403
34,641
9,917,192 8,345,054
11.1 Capital work-in-progress Civil works
Advances to suppliers and contractors
– 1,489,772 –
1,237,010
1,489,772 1,237,010
11.2 Property and equipment
2009
COSTDEPRECIATION
2009
Additions
Surplus (deletions)
31, 2009
2009
year (deletions)
31, 2009
Book value
as at
Annual
December
rate of
1,867,512 2,098,844 700,734 1,101,533 742,318 315,906 6,050 549,158 885,468 49,522 65,066 Land –freehold
Land –leasehold
Buildings on freehold land Buildings on leasehold land Renovation of leased premises Furniture, fixtures and office equipment Carpets
Machine and equipments Computer equipments Vehicles
Other assets
1,414,802 2,098,844 583,199 1,414,220 962,654 395,219 18,485 924,436 965,927 224,816 137,225 452,710 – 332,485 1,000 419,495 72,462 1,849 168,385 534,375 5,690 1,811 9,139,827 1,990,262 –
–
–
–
–
–
–
–
–
–
–
– – – – – (26,938)
(4,626)
(505)
(14,296)
(4,363)
(20,049)
– 1,867,512 2,098,844 915,684 1,415,220 1,355,211 463,055 19,829 1,078,525 1,495,939 210,457 139,036 – – 181,819 255,758 437,562 115,782 11,779 414,618 461,345 149,889 54,963 (70,777) 11,059,312 2,083,515 – – 33,131 57,929 201,417 33,414 2,357 125,867 152,057 28,283 19,007 – – – – (26,086)
(2,047)
(357)
(11,118)
(2,931)
(17,237)
– – – 214,950 313,687 612,893 147,149 13,779 529,367 610,471 160,935 73,970 653,462 (59,776) 2,677,201 8,382,111 –
–
5
5
20
10 – 33
20
20
20
20
20 – 25
2008
COSTDEPRECIATION
2008
Additions
Surplus (deletions)
31, 2008
2008
year (deletions)
31, 2008
Book value
as at
Annual
December
rate of
Land – freehold
404,943 10,809 999,050 – 1,414,802 – – Land – leasehold
465,970 956,829 859,106 (183,061) 2,098,844 – – Buildings on freehold land
570,103 13,096 – – 583,199 160,782 21,037 Buildings on leasehold land
796,861 434,298 – 183,061 1,414,220 163,080 92,678 Renovation of leased premises
612,386 378,479 – (28,211) 962,654 332,412 118,845 Furniture, fixtures and office equipment
296,401 115,398 – (16,580) 395,219 95,508 26,389 Carpets
15,686 3,156 – (357)
18,485 10,072 2,003 Machine and equipments
647,008 308,587 – (31,159) 924,436 334,113 100,021 Computer equipments
738,948 256,845 – (29,866) 965,927 378,791 101,461 Vehicles
476,820 37,975 – (12,517) 224,816 166,548 46,278 (277,462) * Other assets
61,672 75,553 – – 137,225 47,288 7,675 – – – – (13,695)
(6,115)
(296)
(19,516)
(18,907)
(6,952)
(55,985) * – 1,414,802 2,098,844 401,380 1,158,462 525,092 279,437 6,706 509,818 504,582 74,927 –
–
5
5
20
10 – 33
20
20
20
20
82,262 20 – 25
5,086,798 2,591,025 1,858,156 (118,690) 9,139,827 1,688,594 516,387 (277,462) * Assets held under finance lease
Vehicles
8,302 14,168 – – 22,470 2,456 2,923 (65,481) 2,083,515 7,056,312 (55,985) * 5,095,100 2,605,193 1,858,156 (65,481) 2,088,894 7,073,403 (55,985) *
(118,690) 9,162,297 1,691,050 519,310 (277,462) * – – – 181,819 255,758 437,562 115,782 11,779 414,618 461,345 149,889 54,963 5,379 17,091 20
11.2.1 Cost of fully depreciated property and equipment still in use is Rs. 206,422 thousand (2008: Rs. 176,193 thousand).
11.2.2 The Bank’s freehold and leasehold land was revalued by valuers approved by Pakistan Banks Association at December
31, 2008 on the basis of their professional assessment of the present market value. The revaluation resulted in a net
surplus of Rs. 1,858,156 thousand over book value which was incorporated in the books of account of the Bank during
2008.
page | 158
11.2.3 Detail of disposals of operating fixed assets
Particulars of assets Original Accumulated
cost depreciation
Book
value
Sale proceeds
Mode of
disposal
Particulars of buyer
Rupees in ‘000
Honda Civic
1,648 404 1,244 1,700 As per Group policy Mr. Tauheed Siddiqui - Ex Executive
Honda Civic
1,515 328 1,187 1,187 -do-
Mr. Mansoor Akbar - Contractual Ex- Executive
Toyota Corolla
969 452 517 547 - do -
Mr. Mian Shamim Ahmed - Executive
Suzuki Cultus
690 541 149 285 - do -
Mr. Shoaib Jaffery - Executive
Suzuki Cultus
634 222 412 432 - do -
Mr. Saleem Ahmad - Executive
Suzuki Cultus
640 384 256 450 Insurance claim
Askari General Insurance Company Limited
– a related party
2,206 1,697 509 509 -do-
-do
Computer equipments
655 177 478 478 -do-
-do
Furniture and Fixtures
641 89 552 552 -do-
-do
Generator
1,010 795 215 240 Trade in
Power Vision, Lahore - Engineers and Consultants
Data Card Machine
3,639 3,334 305 640 -do-
Crest Corporation, Karachi
780 442 338 31 -do-
Muhammad Aslam Brothers, Okara
3,133 3,131 2
150 Tender
Unique Wood Works, Rawalpindi
Other assets having book value
of less than Rs. 250,000/- or
cost of less than Rs. 1,000,000/ other than vehicles sold to
Bank’s executives / related party
18,160 11,996 6,164 7,201 58,396 50,685 7,711 11,531 2009
76,556 62,681 13,875 18,732 2008
119,690 65,481 53,209 49,220
Rupees in ‘000
Notes
2009
2008
11.3 Intangible assets Goodwill
Islamabad Stock Exchange membership card
30,136 4,505 30,136
4,505
34,641 34,641
12.
OTHER ASSETS
Income / mark-up accrued in local currency
12.1
Income / mark-up accrued in foreign currencies
Advances, deposits, advance rent and other prepayments
Advance taxation (payments less provisions)
Un-realized gain on forward foreign exchange contracts - net
Suspense account
Stationary and stamps in hand
Dividend receivable
Others 6,380,759 142,876 907,986 1,987,757 125,967 16,816 53,065 25,599 460,813 5,154,173
148,122
1,446,908
1,932,874
–
15,770
52,997
17,945
253,553
Less: Provision against other assets
12.2
10,101,638 (459)
9,022,342
(459)
10,101,179 9,021,883
Other assets - net of provision
12.1 This balance has been arrived at after adjusting interest in suspense of Rs. 3,361,765 thousand (2008: Rs. 2,176,886
thousand).
Rupees in ‘000
2009
2008
12.2 Provision against other assets
Opening balance
Charge for the year
Reversals
Amount written-off
459 – – – –
459
–
–
Closing balance
459 459
page | 159
Rupees in ‘000
Notes
13.
BILLS PAYABLE
In Pakistan
14.
BORROWINGS
2009
2008
2,945,670 2,584,828
In Pakistan
Outside Pakistan
19,143,378 156,785 15,189,514
634
19,300,163 15,190,148
In local currency
19,143,378 156,785 15,189,514
634
19,300,163 15,190,148
14.1 Particulars of borrowings with respect to currencies
14.2 Details of borrowings - secured / unsecured
In Pakistan - local currency
Secured
Borrowings from the State Bank of Pakistan:
Export refinance scheme
Long term financing of export oriented projects
Repurchase agreement borrowings (repo)
14.2.1
14.2.2
14.2.3
11,920,153 1,780,058 4,473,167 12,090,551
1,811,653
767,310
14.2.4
970,000 520,000
19,143,378 15,189,514
Outside Pakistan - foreign currencies
Overdrawn nostro accounts - unsecured
156,785 634
19,300,163 15,190,148
Unsecured
Call borrowings
14.2.1 This facility is secured against demand promissory note executed in favour of the State Bank of Pakistan. The effective
mark-up rate is 6.5% (2008: 6.5%) per annum payable on a quarterly basis.
14.2.2 These carry mark-up rate of 5% (2008: 5%) per annum payable on a quarterly basis.
14.2.3 These are secured against pledge of Government Securities, and carry mark-up ranging from 11.65% to 12.02% (2008:
9.5% to 12.5%) per annum and have maturities upto 3 (2008: 3) months.
14.2.4 These represent borrowings at mark-up rates ranging from 11.5% to 12.6% (2008: 14.5% to 15.25%) per annum and have
maturities upto 3 (2008: 1) months.
Rupees in ‘000
15.
2008
DEPOSITS AND OTHER ACCOUNTS
Customers
Fixed deposits
Saving deposits
Current accounts - non-remunerative
Special exporters’ account
Margin accounts
Others Financial institutions
Remunerative deposits
Non-Remunerative deposits
2009
page | 160
47,689,401 110,245,202 44,335,822 21,743 1,853,597 268,063 39,675,699
80,256,954
43,245,593
30,562
1,983,653
257,099
1,494,658 4,417 2,047,388
8,364
205,912,903 167,505,312
Rupees in ‘000
2009
2008
15.1 Particulars of deposits
In local currency
174,220,273 31,692,630 141,713,869
25,791,443
205,912,903 167,505,312
15.1.1 Deposits include Rs. 6,409,041 (2008: Rs. 1,648,732) thousand due to related parties.
Rupees in ‘000
2009
2008
16.
SUB-ORDINATED LOANS
Term Finance Certificates – I
Term Finance Certificates – II
Term Finance Certificates – III
1,497,300 1,497,600 3,000,000 1,497,900
1,498,200
–
5,994,900 2,996,100
The Bank has raised unsecured sub-ordinated loans in three separate Term Finance Certificates issued to improve the
Bank’s capital adequacy. The salient features of the issue are as follows::
Term Finance Certificate - I Term Finance Certificate - II Term Finance Certificate - III
Outstanding amount Rupees in thousand
1,497,300 1,497,600 3,000,000
Issue date
February 4, 2005
October 31, 2005
November 18, 2009
Total issue
Rating
AA–
AA–
AA–
Lahore Stock Exchange
(Guarantee) Limited
Listing
Rate
Payable six monthly - Base Payable six monthly - Base Rate plus 1.5%
Rate plus 1.5%
Payable six monthly - Base
Rate plus 2.5%
(after 5 years: 2.95%)
setting date.
setting date.
setting date.
8 Years
8 Years
10 Years
Repayment
Call option
–
–
Exerciseable after 60 months
from the date of issue subject
to approval by the SBP.
Redemption
6-96th month: 0.32%
97-120th month: 99.68%
6-90th month: 0.3%
96th month: 99.7%
6-90th month: 0.3%
96th month: 99.7%
page | 161
17.
LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE Minimum
Rupees in ‘000
lease payments 2009
Not later than one year Later than one year and not later than five years 3,627 1,204 10,384 14,011 Financial
charges for
future periods
Principal
outstandings
2,423 4,995 2,114 2,881
1,264 9,120 16,855 3,163 13,692
2,468 11,543 21,850 5,277 16,573
The liabilities represent the obligations for car lease financing from Bank Alfalah Limited and Faysal Bank Limited. The
rates of mark-up payable on facilities with Bank Alfalah Limited are six month average KIBOR plus 2.5 % with floor of
11.5 %, six month average KIBOR plus 3% with a floor of 12.5%, six month average KIBOR plus 2.75% with a floor of 12.5%
and six month average KIBOR plus 3% with a floor of 13.5%. Car finance facilities availed from Faysal Bank Limited carry
mark-up at one year average KIBOR plus 2%, one year average KIBOR plus 3% and one year average KIBOR plus 4% per
annum with no floor and no cap. The Company has the option to purchase the assets at the end of the lease tenure at
the guaranteed residual value.
Rupees in ‘000
18.
2008
Financial
charges for
Principal
Minimum
future periods
outstandings lease payments
Note
2009
2008
DEFERRED TAX LIABILITIES
Deferred credits/ (debits) arising due to:
Accelerated tax depreciation
– excess of 1% of total advances – classified in sub–standard category
Tax loss for the year
Excess of accounting book value of leased assets
over leased liabilities
Pre commencement expenditure of AIML
Provision for staff gratuity and compensated absences of AIML
Unused tax loss of AIML
Deferred tax asset not recognised by AIML
18.1
661,212 676,479
(275,021)
(21,812)
– –
–
(164,394)
498 (186)
(559)
(12,126)
9,797 941
(559)
–
–
–
Deficit on revaluation of available for sale securities
361,803 (27,878)
512,467
(496,294)
333,925 16,173
18.1 Deferred tax asset of AIML has been recognised only to the extent that it is expected to reverse in the foreseeable
future due to availability of tax losses. Accordingly, deferred tax asset amounting to Rs. 9,797 thousand (2008: Nil) has
not been recognised in these consolidated financial statements.
18.2 Deferred tax asset (net) related to ASL has not been recognised on the unused tax losses amounting to Rs. 24,978
thousand (2008: Rs. 46,407 thousand), provision for doubtful debts amounting to Rs. 66,215 thousand (2008:
Rs. 67,724), provision for gratuity amounting to Rs. 2,063 thousand (2008: Rs. 1,480 thousand) and accelerated tax
depreciation amounting to Rs. 1,484 thousand (2008: Rs. 190 thousand), cost of intangibles claimed in prior years
Rs. 4,505 thousand (2008: Rs. 4,505 thousand) and liability against asset subject to finance lease amounting to Rs. 105
thousand (2008: Rs. 205 thousand) since future profitability of ASL is not certain to realise net deferred tax asset.
page | 162
Rupees in ‘000
19.
OTHER LIABILITIES
Mark–up / return / interest payable in local currency
Mark–up / return / interest payable in foreign currencies
Unearned income / commission
Accrued expenses
Advance payments
Security deposit Ijarah financing
Unclaimed dividends
Branch adjustment account
Payable against purchase of listed shares
Withholding taxes payable
Federal excise duty payable
Un-realized loss on forward foreign exchange contracts - net
Others (Withholding tax payable etc.)
20.
2009
2008
1,698,122 53,960 165,858 409,652 223,682 598,215 37,202 990,844 75,935 27,943 26,385 – 33,515 525,150 1,559,920
92,209
203,750
194,389
119,877
577,965
38,027
1,253,935
7,216
27,001
3,848
347,258
–
354,053
4,866,463 4,779,448
12,000,000 7,000,000
675,000 675,000
4,398,467 3,383,774
5,073,467 4,058,774
SHARE CAPITAL
20.1 Authorized capital
2009
Number of shares
1,200,000,000 2008
700,000,000 Ordinary shares of Rs. 10 each 20.2 Issued, subscribed and paid up
Number of shares
Ordinary shares of Rs. 10 each:
67,500,000
67,500,000
Fully Paid in cash 439,846,635
338,377,308
507,346,635
405,877,308 Issued as bonus shares 20.3 Capital Risk Management
The company’s objectives when managing capital are to safeguard the company’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Bank may adjust
the amount of dividend paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce
debt.
In terms of BSD circular No. 7 of 2009 issued by the State Bank of Pakistan, the Bank is required to enhance its existing
paid up capital to Rs. 10 billion (net of losses) to be achieved in phased manner as follows:
Minimum paid up capital (net of losses)
Rs 6 billion
Rs 7 billion
Rs 8 billion
Rs 9 billion
Rs 10 billion
The required minimum capital requirement can be achieved by the Bank either by fresh capital injection or retention
of profits. The stock dividend declared after meeting all the legal and regulatory requirements, and duly disclosed in
the annual audited financial statements will be counted towards the required paid up capital of the Bank pending
completion of the formalities for issuance of bonus shares. The Bank intends to meet this requirement by way of
bonus issue subsequent to balance sheet date, in this year.
page | 163
Rupees in ‘000
Statutory
Reserve
Revenue
Reserves
2009
2008
21.
RESERVES
Balance as at January 01
Transfer from profit and loss account
Bonus shares issued
2,912,711 221,559 – 4,776,516 338,225 (1,014,693)
7,689,227 559,784 (1,014,693)
6,930,265
758,962
–
Balance as at December 31
3,134,270 4,100,048 7,234,318 7,689,227
21.1 Reserves as at December 31, 2009 include Rs. 2,241,958 thousand (2008: Rs. 445,798 thousand) in respect of net of tax
benefit of 40% (2008: 30%) of Forced Sale Value (FSV) of pledged stocks, mortgaged commercial, industrial properties
(land and building only) held as collateral against non-performing advances allowed under BSD circular No 10 of 2009
dated October 20, 2009 and referred in note 10.5.1 above. Reserves to that extent are not available for payment of cash
or stock dividend in terms of above referred circular.
Rupees in ‘000
2009
2008
22.
SURPLUS ON REVALUATION OF ASSETS
Surplus on revaluation of land
(Deficit) / surplus on revaluation of available for sale securities
1,858,156 1,858,156
i) Federal Government securities
ii) Listed shares
iii) Other securities
(88,010)
89,852 (81,492)
(242,800)
(1,077,249)
(97,933)
Less: related deferred tax effect
(79,650)
27,878 (1,417,982)
496,294
(51,772)
(921,688)
1,806,384 936,468
i) Government
ii) Others 2,755,086 6,862,016 3,577,163
7,832,474
9,617,102 11,409,637
12,354 7,545
i) Government
ii) Banks and other financial institutions
iii) Others
56,911,331 1,083,718 10,404,884 61,883,864
942,566
12,580,856
68,399,933 75,407,286
68,412,287 75,414,831
23.3 Trade-related contingent liabilities 25,410,721 31,333,855
3,134,363 4,215,064
23.
CONTINGENCIES AND COMMITMENTS
23.1 Direct credit substitutes
23.2 Transaction-related contingent liabilities
Money for which the Bank is contingently liable:
a) Contingent liability in respect of guarantees given on behalf
of directors or officers or any of them (severally or jointly)
with any other person, subsidiaries and associated undertakings. b) Contingent liability in respect of guarantees given, favouring:
23.4 Other contingencies
These represent certain claims by third parties against the Bank, which
are being contested in the Courts of law. The management is of the view
that these relate to the normal course of business and are not likely to
result in any liability against the Bank.
page | 164
23.5 Tax contingencies
i)
For tax assessments carried out to date, tax demands of approximately Rs. 3,340 million and Rs. 53 million, raised
by the tax authorities, relate to provision against Non Performing Loans (NPLs) and diminution in the value of
investments respectively are under litigation. The Income Tax Appellate Tribunal (ITAT) upto Tax Year 2006 has
decided appeals in favour of the Bank on the issue of provisions against NPLs, while tax demand for provision
for diminution in value of investment has been set aside for all relevant years. The income tax department
has filed reference applications before the High Court on the above issues which has not yet been admitted for
regular hearing. Based on advice from tax advisors, the management is hopeful that the High Court will uphold the
decisions of Appellate Authorities.
For Tax year 2008 and 2009 the appeals are pending before ITAT and the Commissioner Income Tax (CIT) (Appeals)
respectively.
Notwithstanding the above, should these contingencies materialize at a later stage, these will give rise to a deferred
tax debit being a timing difference in nature, as the Bank will not be required to pay tax on future realization, if any,
of these receivables.
The department issued re-amended assessment orders for tax years 2005 to 2008 on the issue of taxing
commission and brokerage income at normal tax rate instead of under the presumptive tax regime and allocation
of expenditure to dividend / capital gains, raising tax demand of Rs. 582 million approximately. Such issues
however have been decided in the Bank’s favour by the CIT (Appeals) for the Tax Year 2008 except on the issue of
allocation of financial expenses. The Bank has filed appeals against the orders before the ITAT in respect of Tax
years 2005 to 2008. Based on advice from tax consultants, the management is hopeful that the issues in appeals
will be ultimately decided in the Bank’s favour.
ii)
Rupees in ‘000
2009
2008
23.6 Commitments in respect of forward lending
Commitments against “REPO” transactions
3,922,616 4,493,702 2,571,940
795,391
–
–
–
153,126
Purchase
Sale
24,552,607 17,646,611 15,722,257
10,319,270
23.9 Commitments for the acquisition of operating fixed assets
462,763 280,440
23.7 Commitments in respect of forward purchase /
sale of listed equity securities
Purchase
Sale
23.8 Commitments in respect of forward exchange contracts
23.10 Commitments to extend credit
The Bank makes commitments to extend credit in the normal course of its business but these being revocable
commitments do not attract any significant penalty or expense if the facility is unilaterally withdrawn except for
Rs 2,332,650 thousand (2008: Rs. 1,354,550 thousand).
Rupees in ‘000
2009
2008
23.11 Bills for collection
Payable in Pakistan
5,626,908 10,673,130 3,722,886
12,300,025
16,300,038 16,022,911
Bills for collection represent bills drawn in favour of various financial institutions in Pakistan and abroad on behalf of
Bank’s customers. These are accepted by the Bank as an agent and the Bank does not carry any credit risk in respect
of these bills.
page | 165
24.
Off balance sheet financial instruments
Off balance sheet financial instruments referred to as derivatives are contracts the characteristics of which are derived
from those of underlying assets. These include forwards and swaps in money and foreign exchange markets. The
Bank’s exposure in these instruments represents forward foreign exchange contracts, on behalf of customers in
imports and exports transactions, forward sales and forward purchases on behalf of customers in the inter-bank
money market and with the State Bank of Pakistan. The Bank also enters into repo transactions against Government
Securities carrying fixed interest rates and having fixed contractual maturities. The risks associated with forward
exchange contracts are managed by matching the maturities and fixing counter parties’ intra-day and overnight limits.
In addition, these also come under the State Bank of Pakistan’s net open position limits. The credit risk associated with
repo transactions is secured through underlying Government Securities.
25.
DERIVATIVE INSTRUMENTS
The Group does not deal in derivative instruments.
Rupees in ‘000
Note
26.
MARK-UP / RETURN / INTEREST EARNED
On loans and advances to:
i) Customers
26.1
ii) Financial institutions
2009
2008
16,650,120 76,194 13,873,841
70,736
On investments
i) Available for sale securities
ii) Held to maturity securities
4,840,476 471,027 3,148,301
487,423
On deposits with financial institutions
On securities purchased under resale agreements
158,717 468,714 453,092
362,349
22,665,248 18,395,742
26.1 This includes an amount of Rs. 162,389 thousand (2008: Rs. 25,414 thousand) on account of income received from
related parties.
Rupees in ‘000
Note
2009
2008
27.
MARK-UP / RETURN / INTEREST EXPENSED
On deposits
On securities sold under repurchase agreements
On sub-ordinated loans
On other short term borrowings
11,557,692 501,514 559,984 998,038 8,524,877
730,393
383,785
1,008,222
13,617,228 10,647,277
62,177 14,336 (856)
47,015 21,045 266
1,091
12,763
28,704
143,717 42,824
32,114 4,857 12,506 355,918 3,796 30,012
(3,989)
11,855
304,481
1,076
409,191 343,435
28.
GAIN ON SALE OF INVESTMENTS - NET
Federal Government Securities Market Treasury Bills Pakistan Investment Bonds Term Finance Certificates Shares - Listed Others
29.
OTHER INCOME
Rent on property
29.1
Net profit / (loss) on sale of property and equipment
Rent of lockers
Recovery of expenses from customers
Others
29.1 This includes an amount of Rs. 19,719 thousand (2008: Rs. 23,966 thousand) on account of rent received from related
parties.
page | 166
Rupees in ‘000
30.
Notes
2009
2008
ADMINISTRATIVE EXPENSES
Salaries, allowances, etc. Charge for defined benefit plan
36.3
Contribution to defined contribution plan Non-executive directors’ fees, allowances and other expenses
Rent, taxes, insurance, electricity, etc.
Legal and professional charges
Brokerage and commission
Communications
Repairs and maintenance
Stationery and printing
Advertisement and publicity
Donations
Auditors’ remuneration
30.1
Depreciation 11.2
Finance charges on leased assets
Other expenditure (traveling, security services, vehicle
running expenses, etc.)
3,588,102 138,260 107,882 655 834,828 75,280 138,096 299,974 302,365 117,587 74,124 18,000 8,335 657,184 1,732 3,020,726
110,854
101,208
755
673,374
38,089
171,363
261,045
165,087
105,989
154,667
–
5,832
519,310
1,403
762,289 706,098
7,124,693 6,035,800
Audit fee Fee for the audit of provident and gratuity funds
Special certifications, half year review, audit of subsidiary companies
and the audit of consolidated financial statements
Out-of-pocket expenses
2,500 80 2,200
70
5,171 584 2,972
590
8,335 5,832
30.1 Auditors’ remuneration
31.
OTHER CHARGES
Penalties imposed by the State Bank of Pakistan 33,515 853 –
10,987
34,368 10,987
561,584 (30,837)
29,698
109,060
32.
TAXATION
For the year
Current
Deferred
For prior years
Current
Deferred
530,747 138,758
119,827 (119,827)
(51,043)
–
–
(51,043)
530,747 87,715
32.1 Relationship between tax expense and accounting profit
Profit before taxation 1,609,897 502,770
Tax at applicable tax rate of 35 percent (2008: 35 percent)
Effect of:
– Income chargeable to tax at lower rates
– Prior years’ adjustment
– Amounts not deductible for tax purposes
– Opening deferred tax reversed by AIML
– Deferred tax not recognised during July to December by AIML
– Others
563,464 175,970
(40,634)
–
298 125 8,993 (1,499)
(45,332)
(50,000)
3,846
–
–
3,231
530,747 87,715
page | 167
Rupees in ‘000
2009
2008
33.
BASIC / DILUTED EARNINGS PER SHARE
Profit for the year - Rupees in ‘000
1,077,998 415,470
Weighted average number of Ordinary Shares - numbers
507,346,635 507,346,635
Basic / diluted earnings per share - Rupees 2.12 0.82
There is no dilutive effect on the basic earnings per share of the Group.
Weighted average number of ordinary shares for 2008 has been restated to give effect of bonus shares issued during
the year.
Rupees in ‘000
2009
2008
34.
CASH AND CASH EQUIVALENTS
Call money lendings
Term deposits with MCB Bank Limited
19,385,850 8,374,640 100,000 35,000 16,029,666
3,967,816
675,000
–
27,895,490 20,672,482
35.
STAFF STRENGTHNumber of employees
Permanent Temporary / on contractual basis Daily wagers Commission based 4,461 1,669 –
120 4,306
1,707
–
541
Group’s own staff strength at the end of the year Outsourced 6,250 1,111 6,554
1,064
Total staff strength at the end of the year 7,361 7,618
36.
DEFINED BENEFIT PLAN
accordance with the actuarial recommendation.
The benefits under the gratuity scheme are payable on retirement at the age of 60 years or earlier cessation of
service in lump sum. The benefit is equal to one month’s last drawn basic salary for each year of eligible service or part
thereof.
2009
2008
36.2 The amounts recognised in the balance sheet are as follows:
Present value of defined benefit obligation
Fair value of plan assets
705,452 (482,462)
542,214
(327,885)
Unrecognised actuarial losses
222,990 (218,251)
214,329
(211,697)
4,739 2,632
Interest on obligation
Expected return on plan assets
Actuarial loss recognised
86,446 81,261 (49,165)
19,718 75,423
44,114
(24,964)
16,281
138,260 110,854
36.4 Actual return on plan assets
48,638 6,564
Net liability
36.3 The amounts recognised in profit and loss account are as follows:
page | 168
Rupees in ‘000
2009
2008
36.5 Changes in the present value of defined benefit obligation
Opening defined benefit obligation
Interest cost
Actuarial loss
Benefits paid
542,214 86,446 81,261 25,745 (30,214)
440,376
75,423
44,114
9,624
(27,323)
Closing defined benefit obligation
705,452 542,214
36.6 Changes in fair value of plan assets
Opening fair value of plan assets
Expected return
Actuarial losses
Contributions by employer
Benefits paid
327,885 49,165 (527)
136,153 (30,214)
249,035
24,864
(27,807)
109,116
(27,323)
Closing fair value of plan assets
482,462 327,885
The Group expects to contribute Rs. 148,773 thousand to its defined benefit gratuity plan in 2010.
The expected return on plan assets is based on the market expectations and depend upon the asset portfolio of the
Group, at the beginning of the period, for returns over the entire life of the related obligation.
2009
2008
Rupees ‘000
Percentage
Rupees ‘000
Percentage
36.7 Break-up of category of assets
Defense saving certificates
Investment in mutual fund
Bank deposit account
–
317,047 415 165,000 –
66
–
34
57,452 153,808 367 116,258 18
47
–
35
482,462 100
327,885 100
The main assumptions used for actuarial valuation are as follows:
2009
Expected rate of return on plan assets - per annum
Average expected remaining life of employees - years
13 - 14%
13 - 14%
13 - 14%
8 - 13
2008
15%
15%
15%
9 - 14
36.9 Amounts for current and previous four annual periods are as follows:
Rupees in ‘000
2009
2008
2007
2006
2005
As at December 31,
Defined benefit obligation
Plan assets
705,452 (482,462)
542,214 (327,885)
440,376 (249,019)
266,173 (212,931)
199,511
(182,281)
222,990 214,329 191,357 53,242 17,230
(25,745)
(9,624)
(133,140)
(35,523)
(7,992)
(527)
(27,807)
(6,745)
(489)
(3,707)
Deficit
Experience adjustments
Actuarial loss on obligation Actuarial loss on plan assets
page | 169
37.
DEFINED CONTRIBUTION PLAN
contributions are made both by the Bank and by the employees to the fund at the rate of 8.33% of basic salary of the
employee.
AIML operates a funded staff provident fund scheme as a defined contribution plan for all eligible employees. Equal
monthly contributions are made by the Company and the staff at the rate of 6% of basic salary of the employee.
ASL operates an unfunded provident fund scheme for all its regular employees for which equal monthly contributions
are made by the Company and the employees at the rate of 10% of basic salary of the employee.
38.
COMPENSATED ABSENCES
The Bank grants compensated absences to all its regular employees as per effective Service Rules. Provisions are
made in accordance with the actuarial recommendation.
Under this unfunded scheme, regular employees are entitled to 30 days privilege leave for each completed year of
service. Unutilized privilege leave are accumulated upto a maximum of 120 days which could be encashed at any
time of retirement or can also be encashed during service. These are encashable on the basis of last drawn gross
salary.
Present value of obligation as at December 31, 2009 was Rs. 149,442 thousand against related liability of Rs. 115,571
thousand carried at December 31, 2008. Expense for the year of Rs. 33,871 (2008: 79,675) thousand has been included
under administrative expenses. The main assumptions used for actuarial valuation are as follows:
Leave accumulation factor - days
39.
COMPENSATION OF DIRECTORS AND EXECUTIVES
Rupees in ‘000
Fees Managerial remuneration
Charge for defined benefit plan
Contribution to defined contribution plan
Rent and house maintenance
Utilities
Medical
Special performance incentive / Bonus
Others
2009
2008
13%
13%
5
President / Chief Executive
15%
15%
5
Directors 2009
Executives
2009
2008
2008
2009
2008
105 9,240 770 770 4,158 924 1,630 1,540 –
110 6,000 7,390 1,065 2,700 600 600 1,750 –
655 – – – – – – – –
755 – – –
– – – – –
– 478,075 37,752 39,118 203,935 45,319 47,371 75,314 8,189
615
451,141
55,144
68,950
196,692
42,348
42,312
94,886
8,855
19,137 20,215 655 755 935,073 960,943
1
2
10 10 495 488
Number of persons
Executives mean employees, other than the chief executive and directors, whose basic salary exceeds five hundred
thousand rupees in a financial year. Chief Executive is also provided with Bank maintained car.
page | 170
40.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Rupees in ‘000 2009
2008
Book value Fair value Book value Fair value
19,385,850 8,374,640 4,649,059 66,885,617 19,385,850 8,374,640 4,649,059 66,885,617 16,029,666 3,967,816 4,479,754 35,464,972 16,029,666
3,967,816
4,479,754
35,464,972
51,327,955 5,388,914 78,323,032 10,101,179 51,327,955 5,388,914 78,323,032 10,101,179 35,825,637 3,159,605 89,833,000 9,021,883 35,825,637
3,159,605
89,833,000
9,021,883
244,436,246 244,436,246 197,782,333 197,782,333
40.1 On-balance sheet financial instruments
Assets
Investments
Advances
Term loans
Staff advances
Other advances
Other assets
Liabilities
Bills payable
Borrowings
Current and saving accounts
Term deposits
Sub-ordinated loans
Other liabilities
2,945,670 19,300,163 2,945,670 19,300,163 2,584,828 15,190,148 2,584,828
15,190,148
158,223,502 47,689,401 5,994,900 11,543 4,866,463 158,223,502 47,689,401 5,994,900 11,543 4,866,463 127,829,613 39,675,699 2,996,100 16,573 4,779,448 127,829,613
39,675,699
2,996,100
16,573
4,779,448
239,031,642 239,031,642 193,072,409 193,072,409
24,552,607 24,552,607 15,722,257 15,722,257
40.2 Off-balance sheet financial instruments
Forward purchase of foreign exchange
4,493,702 4,493,702 795,391 795,391
Forward sale of foreign exchange
17,646,611 17,646,611 10,319,270 10,319,270
3,922,616 3,922,616 2,571,940 2,571,940
The fair value of investments is based on quoted market prices and rates quoted at Reuters Pages (PKRV) with the
exception of unlisted securities, held to maturity securities and National Prize Bonds.
Fair value of remaining financial assets and liabilities except fixed term loans, staff loans, non-performing advances
and fixed term deposits is not significantly different from the carrying amounts since assets and liabilities are either
short term in nature or in the case of customer loans and deposits are frequently repriced.
Fair value of fixed term loans, staff loans, non-performing advances and fixed term deposits cannot be calculated
with sufficient reliability due to absence of current and active market for such assets and reliable data regarding
market rates for similar instruments. The provision for non-performing advances has been calculated in accordance
with the Bank’s accounting policy as stated in note 5.4. The maturity profile and effective rates are stated in
note 45.2.4.
page | 171
41.
Segment details with respect to Business Activities
The segment analysis with respect to business activity is as follows:
Rupees in ‘000 Corporate Finance 129,671 36,152 93,519 68,705 – – 792 0.06%
0.02%
Trading and Sales Retail Banking Commercial Banking 222,299 2,863,833 61,976 734,280 160,323 2,129,553 232,274 18,285,963 – 2,641,129 – 2,473,403 2,680 9,132,424 0.10%
1.25%
0.03%
0.34%
21,903,256 22,142,805 (239,549)
248,263,917 15,084,322 10,284,254 224,016,006 9.52%
10.26%
2009
Payment and
Settlement
Assets
Management
Retail
Brokerage
Sub-Ordinated
Loans
Net income (loss)
Segment Liabilities
Net income (loss)
Segment Liabilities
Assumptions used:
–
Administrative expenses have been allocated to segments based on respective segment income.
–
Unallocatable assets representing 5.05% (2008: 5.84%) of the total assets have been allocated to segments based
on their respective incomes.
–
Unallocatable liabilities representing 1.30% (2008: 1.44%) of the total liabilities have been allocated to segments
based on their respective assets.
page | 172
54,754 15,350 39,404 30,939 – – 7,160 0.03%
0.01%
134,328 1,443,099 37,660 1,124,418 96,668 318,681 232,742 17,860,780 – 1,826,499 – 1,963,567 17,564 188,717 0.07%
0.74%
0.02%
0.62%
19,415,854 19,060,011 355,843 199,668,219 9,862,918 9,049,164 189,699,433 10.00%
10.50%
85,136 23,736 61,400 45,108 – – 520 0.04%
0.01%
Agency
Services
12,242 3,413 8,829 6,486 – – 75 0.01%
0.00%
67,127 115,413 (48,286)
125,045 – – 22,819 0.03%
0.01%
17,515 13,423 4,092 83,597 – – 21,697 0.01%
0.00%
–
559,984
(559,984)
–
–
–
6,168,554
0.00%
0.26%
6,095 1,709 4,386 3,444 – – 797 0.00%
0.00%
165,382 122,630 42,752 217,105 – – 28,979 0.09%
0.07%
8,763 10,130 (1,367)
103,186 – – 11,091 0.00%
0.01%
–
383,785
(383,785)
–
–
–
3,129,356
0.00%
0.21%
2008
41,944 11,759 30,185 23,700 – – 5,485 0.02%
0.01%
42.
RELATED PARTY TRANSACTIONS
As Army Welfare Trust (AWT) holds 50.17 % (2008: 50.17 %) of the Bank’s share capital at the year end, therefore, all
subsidiaries and associated undertakings of AWT are related parties of the Bank. Also, the Bank has related party
relationships with its subsidiary companies, its directors, key management personnel, entities over which the directors
are able to exercise significant influence and employees’ funds.
Details of transactions with related parties and balances with them at the year end were as follows:
December 31, 2009December 31, 2008
Key
management
Rupees in ‘000
Parent
Personnel
Directors
Balances outstanding as at
– Advances at the year end
– Deposits at the year end
– Outstanding commitments and contingent liabilities for irrevocable commitments and contingencies
– Investment in shares / Lendings - at cost
– Reimbursable expenses on behalf of Askari Income Fund
– Management fee and commission receivable
from Askari Income Fund
– Reimbursable expenses on behalf of Askari Asset Allocation Fund
from Askari Asset Allocation Fund
– Reimbursable expenses on behalf of Askari Islamic Income Fund
from Askari Islamic Income Fund
– Reimbursable expenses on behalf of Askari Islamic Asset Allocation Fund
from Askari Islamic Asset Allocation Fund
– Reimbursable expenses on behalf of Askari Sovereign Cash Fund
from Askari Sovereign Cash Fund
– Pre–paid insurance premium by AIML
– Payable to employee funds by AIML
Transactions during the year ended
– Net mark–up / interest earned – Net mark–up / interest expensed – Contribution to employees’ funds – Rent of property / service charges received – Rent of property / service charges paid – Remuneration paid – Post employment benefits – Insurance claim received – Insurance premium paid – Dividend Income – Security services costs – Fee, commission and brokerage income – Recovery of expenses from Askari Income Fund by AIML – Recovery of expenses from Askari Islamic Asset Allocation Fund by AIML – Recovery of expenses from Askari Islamic Income Fund by AIML – Recovery of expenses from Askari Sovereign Cash Fund by AIML – Investment in units of Askari Income Fund by AIML – Lease rentals paid – Fees paid – 5,602,346 129,873 47,678 25 11,420 Companies
with common
directorship
Key
having equity
Employee management
under 20%
Funds
Parent
Personnel
Directors
580,242 583,722 –
163,875 – 780,947 74,378 34,644 524 59,063 Companies
with common
directorship
having equity
under 20%
Employees
Funds
631,904 609,455 –
164,623
– – – – – – 12,354 1,500,671 –
–
– – – – – – 7,545 1,248,268 –
–
– – – 5,278 –
– – – 493 –
– – – 3,392 –
– – – 4,855 –
– – – –
– – – 170 –
– – – 680 –
– – – 789 –
– – – 2,273 –
– – – 1,100 –
– – – 258 –
– – – 416 –
– – – 1,196 –
– – – 1,100 –
– – – 282 –
– – – 818 –
– – – 2,028 –
– – – – –
– – – – – – – – – 562 321 – –
–
4,842
– – – – – – – – – – – – –
376
2,653
– 309,815 – 7,662 67,958 – – – – – – 379 3,595 1,220 – – – 155,434 11,899 – – – – – – 581 – – – – – – – – – – 158,794 59,619 – 12,137 51,125 – – 3,356 33,388 – 143,855 81,565 –
1,910
249,993
–
–
–
–
–
–
–
–
–
– 49,029 – 12,080 72,557 – – – – – – 296 2,088 212 – – – 127,596 12,974 – – – – – – 2,816 – – – – – – – – – – 23,326 23,337 – 11,886 23,550 – – 1,502 57,809 73,886 97,668 153,540 –
992
217,918
–
–
–
–
–
–
–
–
–
– – – 5,177 –
– – – 5,040 –
– – – 96 –
– – – 1,100 –
– – – 1,173 –
– – – 1,100 –
– – – 778 –
– – – – –
– – – – – 105 – – 655 50,000 242 – –
–
–
– – – – – 110 – – 755 130,000 110 – –
–
–
– page | 173
43
CAPITAL ADEQUACY
43.1 Scope of Applications
Standardized Approach is used for calculating the Capital Adequacy for Market and Credit risk while Basic Indicator
Approach (BIA) is used for Operational Risk Capital Adequacy purpose.
The Bank has two subsidiaries, Askari Investment Management Limited (AIML) and Askari Securities Limited (ASL).
AIML is the wholly-owned subsidiary of Askari Bank Limited while ASL is 74% owned by the Bank. Both these entities
are included while calculating Capital Adequacy for the Bank using full consolidation method. The fact that Askari Bank
has neither any significant minority investments in banking, securities, or any other financial entities nor does it has
any majority or significant minority equity holding in an insurance excludes it from a need for further consolidation.
Furthermore, the Bank does not indulge in any securitization activity that shields it from the risk inherent in
securitization.
43.2 Capital Management
The objective of managing capital is to safeguard the Bank’s ability to continue as a going concern, so that it
could continue to provide adequate returns to shareholders by pricing products and services commensurately
with the level of risk. It is the policy of the Bank to maintain a strong capital base so as to maintain investor, creditor
and market confidence and to sustain future development of the business. The impact of the level of capital on
shareholders’ return is also recognised and the Bank recognises the need to maintain a balance between the higher
returns that might be possible with greater gearing and the advantages and security afforded by a sound capital
position.
Goals of managing capital
The goals of managing capital of the Bank are as follows:
–
To be an appropriately capitalised institution, considering the requirements set by the regulators of the banking
markets where the Bank operates
–
Maintain strong ratings and to protect the Bank against unexpected events
–
Availability of adequate capital at a reasonable cost so as to enable the Bank to operate adequately and provide
reasonable value added for the shareholders and other stakeholders
Bank’s regulatory capital analysed into three tiers
Tier I capital, which includes fully paid-up capital, share premium, reserves (excluding foreign exchange translation
reserves) and unappropriated profits (net of losses) etc. after deductions for certain specified items such as book
value of intangibles, 50% of other deductions e.g., majority and significant minority investments in insurance and other
financial entities.
Tier II capital, includes subordinated debt subject to a maximum of 50% of total Tier I capital and fulfillment of specified
criteria laid down by the State Bank of Pakistan, general provisions for loan losses (up to a maximum of 1.25 % of total
risk weighted assets), reserves on the revaluation of fixed assets and equity investments after deduction of deficit on
available for sale investments (up to a maximum of 45 percent), foreign exchange translation reserves etc. 50% of other
deductions noted above are also made from Tier II capital.
Tier III supplementary capital, which consists of short term subordinated debt solely for the purpose of meeting a
proportion of the capital requirements for market risks. The bank currently does not have any Tier III capital.
The total of Tier II and Tier III capital has to be limited to Tier I capital.
Banking operations are categorised as either trading book or banking book and risk-weighted assets are determined
according to specified requirements of the State Bank of Pakistan that seek to reflect the varying levels of risk attached
to on-balance sheet and off-balance sheet exposures. The total risk-weighted exposures comprise the credit risk,
market risk and operational risk.
page | 174
On and off-balance sheet assets in the banking book are broken down to various asset classes for calculation of credit
risk requirement. External ratings for assets, where available, are applied using the assessments by various External
Credit Assessment Institutions (ECAIs) and aligned with appropriate risk buckets. Otherwise, the exposures are treated
as unrated and relevant risk weights applied. In addition, there are fixed risk weights for certain types of exposures
such as retail portfolio and residential mortgage finance for which external ratings are not applicable. Collaterals if any,
are used as credit risk mitigant after applying appropriate haircuts under the Comprehensive Approach. Risk weights
notified, are hence applied at adjusted exposures, wherever credit risk mitigation is available. Collaterals used include:
Government of Pakistan guarantees, cash, lien on deposits, shares, government securities, bank guarantees and other
debt securities that fall within the definition of eligible collaterals and also fulfill other specified criteria under the
relevant capital adequacy guidelines.
The calculation of Capital Adequacy enables the Bank to assess the long-term soundness. As the Bank carries on the
business on a wide area network basis, it is critical that it is able to continuously monitor the exposure across the
entire organisation and aggregate the risks so as to take an integrated approach / view. There has been no material
change in the Bank’s management of capital during the period.
43.3 Capital adequacy ratio as at December 31, 2009
The capital to risk weighted assets ratio, calculated in accordance with the State Bank of Pakistan’s guidelines on
capital adequacy, using Basel II standardised approaches for credit and market risks and basic indicator approach for
operational risk is presented below.
Rupees in ‘000
Regulatory capital base
Tier I capital
Fully paid-up capital Reserves (excluding foreign exchange translation reserves)
Unappropriated / unremitted profits (net of losses)
Minority Interest
Less: Book value of intangibles
Deficit on account of revaluation of investments
Other deductions (represents 50% of the majority or
Total Tier I Capital
Tier II Capital
2009
5,073,467 7,234,318 856,439 17,263 (34,641)
– –
2008
4,058,774
7,689,227
338,225
16,111
(34,641)
(921,689)
–
13,146,846 11,146,007
Subordinated debt (upto 50% of total Tier I capital)
General provisions for loan losses subject to 1.25% of total
risk weighted assets
Revaluation reserve (upto 45%)
Foreign exchange translation reserves
Less: Other deductions (represents 50% of the majority or
4,796,940 2,396,880
935,683 800,328 –
987,574
836,170
–
–
–
Total Tier II capital
6,532,951 4,220,624
Eligible Tier III capital – –
Total regulatory capital
19,679,797 15,366,631
page | 175
Risk weighted exposures
Rupees in ‘000
Capital Requirement
2009
Risk Weighted Assets
2008
2009
2008
Credit risk
(comprehensive approach for CRM)
Claims on:
Public Sector Entities (PSEs)
Banks Corporates Retail portfolio
Residential mortgage finance
Listed equities and regulatory capital instruments issued by others banks
Unlisted equity investments
Fixed Assets
Other Assets
Past Due Exposures
Forward Foreign Exchange Contracts
Market risk
Interest rate risk
Equity position risk
Foreign exchange risk
146,702 683,694 1,240,440 7,595,901 2,263,592 384,920 170,821 568,378 124,473 7,736,337 2,180,628 267,297 1,467,024 6,836,944 12,404,403 75,959,014 22,635,916 3,849,196 1,898,006
6,315,308
1,383,035
85,959,302
24,229,197
2,969,970
3,204,048 330,212 9,882,550 1,928,365 6,287,804 113,070 122,934
–
8,310,409
3,719,586
2,965,134
89,348
320,405 33,021 988,255 192,837 628,780 11,307 11,064 – 747,937 334,763 266,862 8,041 6,018 33,373 12,851 247,539
451,652 39,711 60,175 333,725 128,513 2,750,438
5,018,350
441,238
2,064,791 1,640,780 20,647,911 18,230,886
16,606,887 14,796,283 166,068,870 164,403,141
Operational risk Total
Total eligible regulatory capital held
19,679,797 15,366,631
Total risk weighted assets
166,068,870 164,403,141
11.85%
9.35%
page | 176
44.
USE OF CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of financial statements in conformity with approved accounting standards as applicable in Pakistan
requires the use of certain accounting estimates. It also requires management to exercise its judgment in the process
of applying the Bank’s accounting policies. The Bank uses estimates and assumptions concerning the future. The
resulting accounting estimate will, by definition, seldom equal the related actual results. Estimates and judgments
are continually evaluated and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. The areas where assumptions and estimates are
significant to the Bank’s financial statements or where judgment was exercised in application of accounting policies
are as follows:
i)
ii)
iii)
iv)
v)
vi)
45.
RISK MANAGEMENT
Diversity of financial products and activities, deregulation and increased level of competition has necessitated the
need for an effective and structured risk management in banks. At Askari Bank Limited, risk management framework
comprises of a Risk Management Committee (RMC) and a risk management group. RMC is a Board level sub-committee
primarily responsible for the identification, measurement, monitoring and controlling of the Bank’s principal business
risks, adherence to internal risk management policies and compliance with risk related regulatory requirements. The
risk management group is mainly responsible for managing credit, market and operational risks.
classification of investments (note 9)
provision against investments (note 9.2.1) and advances (note 10)
revaluation of freehold and leasehold land (note 11)
useful life of property and equipments (note 11)
income taxes (note 32)
staff retirement benefits (note 36 to note 38)
45.1 Credit Risk:
Credit risk is the risk that arises from the potential that an obligor is either unwilling to perform an obligation or
its ability to perform such obligation is impaired resulting in economic loss to the Bank. The Bank takes necessary
measures to control such risk by monitoring credit exposures, limiting transactions with specific counter parties with
increased likelihood of default and continually assessing the creditworthiness of counter parties.
The focus of the Bank’s commercial lending continues to be short-term trade related financing on a secured and self
liquidating basis. The Bank will also continue its emphasis on diversification of its assets to avert large single industry
or group concentration exposures.
The Bank has built and maintains a sound loan portfolio in terms of a well defined Credit Policy approved by the
Board of Directors. It’s credit evaluation system comprises of well-designed credit appraisal, sanctioning and review
procedures for the purpose of emphasizing prudence in its lending activities and ensuring quality of asset portfolio.
Special attention is paid to the management of non-performing loans. A procedure is also functioning which identifies
loans showing early warning signals of becoming non-performing.
The Bank constantly monitors overall credit exposure and takes analytical and systematic approaches to its credit
structure categorized by group and industry. The credit portfolio is well diversified sectorally with manufacturing and
exports accounting for the bulk of the financing which is considered to be low risk due to the nature of underlying
security.
The Bank is further diversifying its asset portfolio by offering, Consumer Banking products (Personal Finance, Business
Finance, Mortgage Finance and Auto Financing etc.) to its customers, as it provides better margins than traditional
business lending opportunities, whilst spreading the risk over a large number of individual customers and Agriculture
Credit products, primarily aimed to provide quick and cheap credit to the farmers at their door-steps in a simplified
manner.
Risk Management Division has an independent Portfolio Monitoring Department. Dedicated resources are assigned
to scrutinize corporate, commercial, consumer, SME, and agriculture portfolio on a continuous basis and report crucial
findings to the senior management for strategic decision making. Risk factors are identified and necessary actions
are recommended to mitigate these risk factors. During the year portfolio monitoring department also prepared the
Internal Capital Adequacy Assessment Process (ICAAP) and Risk Appetite Policy of the Bank.
45.1.1 Segment information
Segmental Information is presented in respect of the class of business and geographical distribution of Advances,
Deposits, Contingencies and Commitments.
page | 177
45.1.1.1 Segment by class of business
Advances
2009
Rupees in ‘000
Percent
Rupees in ‘000
Carpets Cements
Engineering
Fertilizers
Food and Allied
Fuel / Energy
Ghee and Edible oil
Glass and Ceramics
Hotels and Restaurants
Individuals
Insurance
Investment banks / Scheduled banks
Leasing
Leather products and shoes
Modarabas
Paper and Board
Plastic products
Ready-made garments
Real Estate / Construction
Rice processing and trading
Rubber products
Services (Other than Financial, Hotelling & Traveling)
Sports goods
Sugar
Surgical equipment / Metal products
Synthetic and Rayon
Textile
Tobacco / Cigarette manufacturing Transport and communication
Travel Agencies
Woolen
Others
6,341,128 936,799 6,654,032 167,974 3,898,451 6,932,091 342,837 697,771 2,254,348 6,297,501 3,096,881 1,637,002 200,844 19,224,890 – 500,000 601,042 1,110,415 46,135 266,162 587,669 942,856 8,686,079 2,777,431 137,429 4.30 0.63 4.51 0.11 2.64 4.70 0.23 0.47 1.53 4.27 2.10 1.11 0.14 13.02 – 0.34 0.41 0.75 0.03 0.18 0.40 0.64 5.88 1.88 0.09 2,540,447 1,011,748 1,956,777 72,374 469,657 2,823,250 55,908 345,870 227,324 2,954,673 61,782 52,076 317,336 72,598,543 168,282 2,069,564 115,030 565,023 50 77,799 141,311 441,692 10,528,701 582,266 54,774 1.23 0.49 0.95 0.04 0.23 1.37 0.03 0.17 0.11 1.43 0.03 0.03 0.15 35.26 0.08 1.01 0.06 0.27 0.00 0.04 0.07 0.21 5.11 0.28 0.03 1,072,237 585,236 515,161 4,202 663,216 4,072,601 1,001,645 1,310,261 570,060 9,438,617 2,708,441 21,007 8,473 544,439 1,607 87,546,447 – 63,443 – 398,088 960,800 521,097 16,157,372 376,481 97,696 0.67
0.37
0.32
0.00
0.41
2.55
0.63
0.82
0.36
5.90
1.69
0.01
0.01
0.34
0.00
54.72
–
0.04
–
0.25
0.60
0.33
10.10
0.24
0.06
2,556,054 580,611 121,496 5,976,903 1,115,062 27,240,388 – 4,572,958 114,151 37,002 16,047,820 14,933,533 1.73 0.39 0.08 4.05 0.76 18.45 – 3.10 0.08 0.03 10.87 10.12 5,785,847 76,490 40,920 465,580 19,512 1,512,762 19,682 5,200,927 156,349 58,904 59,438,689 32,904,984 2.81 0.04 0.02 0.23 0.01 0.73 0.01 2.53 0.08 0.03 28.87 15.98 777,982 161,511 3,550 1,997,286 72,272 4,333,202 2,275 2,885,873 353,421 3,165 18,615,328 2,140,930 0.49
0.10
0.00
1.25
0.05
2.71
0.00
1.80
0.22
0.00
11.64
1.34
205,912,903 100.00 159,985,422 100.00
147,633,745 100.00 45.1.1.2 Segment by sector
Private
page | 178
Advances
2009
Rupees in ‘000
Percent
Rupees in ‘000
16,047,820 131,585,925 10.87 89.13 59,438,689 146,474,214 28.87 71.13 18,615,328 141,370,094 11.64
88.36
147,633,745 100.00 205,912,903 100.00 159,985,422 100.00
45.1.1.3 Details of non-performing advances and specific
provisions by class of business segment
Rupees in ‘000
Food & Allied
Fuel / Energy
Individuals
Leather products and shoes
Services
Textile Glass manufacturing
Commodities
Metal industries
Paper industries
Sports goods
Others
2009
Classified Advances
2008
Specific Provision Held Classified advances Specific
Provision Held
162,493 661,808 1,277,931 48,355 156,248 1,609,741 2,592,542 50,915 1,911,855 – 572,163 887,426 36,075 105,576 1,354,425 2,025,186 28,407 41,644 26,417 568,724 959,781 32,418 156,201 640,664 1,826,499 66,186 302,710 –
451,616
787,220
25,164
118,906
845,568
1,548,976
47,637
88,198
113,737 5,328,436 1,110,342 497,388 511,819 398,770 546,176 746,895 109,252 3,925,396 785,230 383,109 278,289 173,005 501,176 451,802 22,577 3,995,739 1,111,782 447,357 198,187 356,188 678,951 299,036 19,863
3,520,832
1,111,782
294,757
169,400
178,095
678,951
138,192
17,725,451 11,658,161 11,689,417 10,025,157
– 17,725,451 – 11,658,161 – 11,689,417 –
10,025,157
17,725,451 11,658,161 11,689,417 10,025,157
45.1.1.4 Details of non-performing advances and
specific provisions by sector
Private
45.1.1.5
Geographical segment analysis
Rupees in ‘000 Pakistan
Asia Pacific (including South Asia)
Europe
United States of America and Canada
Middle East – note 45.1.5.1
Others
Profit before taxation 2009
Total assets Net assets employed employed Contingencies
and
Commitments
1,448,378 – – – 161,519 – 249,836,492 – – – 4,516,946 – 14,847,325 – – – 140,546 – 159,985,422
–
–
–
–
–
1,609,897 254,353,438 14,987,871 159,985,422
45.1.1.5.1 These do not include intra group items of Rs. 4,270,733 thousand (2008: Rs. 5,431,350 thousand) eliminated upon
consolidation of foreign branch results.
45.1.1.5.2 Contingencies and commitments include amounts given in note 23 except bills for collection.
page | 179
45.1.2
Credit risk - General disclosures basel II specific
Basel II Standardized Approach is used for calculating the Capital Adequacy for Credit Risk and Market risk, (along
with Comprehensive Approach for Credit Risk Mitigation CRM) whereas, Basic Indicator Approach (BIA) is used for
Operational Risk Capital Adequacy purposes.
45.1.2.1
Types of exposures and ECAIs used
For domestic claims, ECAIs recommended by the State Bank of Pakistan (SBP), namely Pakistan Credit Rating
Agency Limited (PACRA) and JCR-VIS Credit Rating Company Limited (JCR-VIS) were used. For foreign currency
claims on sovereigns, risk weights were assigned on the basis of the credit ratings assigned by Moody’s. For
claims on foreign entities, rating of S&P, Moody’s, and Fitch Ratings were used. Foreign exposures not rated by
any of the aforementioned rating agencies were categorized as unrated.
Type of exposures for which each agency is used in the year ended 2009 is presented below:
Exposures
PSEs
Banks Corporates
JCR-VIS
PACRA
S&P, Moody’s & Fitch
–
3
3
3
–
3
3
3
3
–
3
3
Credit exposures subject to standardised approach
Exposures
2009
Rating
category Amount
outstanding
Deduction
CRM*
Sovereigns
4,5
PSEs
1
PSEs
2
Banks
1,2,3
Corporates
1
Corporates
2
Corporates
3,4
Corporates
5,6
Unrated
1,467,024 2,801,570 90,000 9,846,146 6,316,860 12,336,024 1,829,888 144,037 220,130,095 – 10,000 – – – 98,094 48,757 – 26,449,674 Total
254,961,644 26,606,525 * CRM= Credit Risk Mitigation
page | 180
Net
Amount
2008
Amount
outstanding
Deduction
CRM*
Net
Amount
1,467,024 2,791,570 90,000 9,846,146 6,316,860 12,237,930 1,781,131 144,037 193,680,421 – 1,599,095 – 952,693 2,892,253 4,288,524 129,384 – 167,604,050 – – – – – 184,000 757 – 12,814,776 –
1,599,095
–
952,693
2,892,253
4,104,524
128,627
–
154,789,274
228,355,119 177,465,999 12,999,533 164,466,466
Following is list of main types of collateral taken by the Bank.
– Cash margins or deposits under lien
– Lien on SSCs, DSCs, etc.
– Residential / commercial mortgage (registered)
– Residential / commercial mortgage (equitable)
– Secured by agricultural land
– Registered charge on stocks, book debts, receivables and other assets
– Pledge of stocks - perishable / non-perishable
– Shares of public listed companies
– Guarantees of Government, Banks Autonomous bodies
– Local bills - cheques / documentary bills
– Import bills - clean
– Export bills – clean
Collateral used by the Bank for Credit Risk Mitigation (CRM) in the simple approach was as follows:
– Cash margin
– Government Securities (with value discounted by 20%)
– Government Securities (for repo-style transactions satisfying conditions for zero-H)
– Guarantees of Government, Banks, PSEs and rated Corporates
45.2 Market Risk:
Market risk, or the risk that the Bank’s earnings and / or capital can be negatively impacted by changes in market
factors such as equity prices, interest rates, and exchange rates, originates from the Bank’s open positions in interest
rate, currency, and equity products that are exposed to market movements. Traded market risk exposures arise from
the Bank’s treasury and capital market operations. Non-traded market risk factors include interest rate risk in the
banking book, equity position risk arising from the Bank’s strategic investments, and structural foreign exchange risk
arising from the Bank’s capital investments in off-shore operations.
The Bank has a policy of identification, measurement, monitoring and control of market risks in order to protect
against adverse movements in market factors and to optimize the risk / return profile of its open positions. The
Market Risk Management Department (“MRMD”) of the Risk Management Division (“RMD”) of the Bank develops and
implements the market risk policy and risk measuring / monitoring methodology, and reviews and reports market
risk against regulatory and internal limits. A Value-at-Risk (“VaR”) methodology is used to measure traded market
risk. In compliance with Basel requirements, VaR is modeled using variance-covariance and historical approaches, at
a 99% confidence interval over a 1-day and 10-day holding period for equity and debt positions in the trading book,
and foreign exchange positions throughout the trading and banking books. Back testing of VaR estimates against
hypothetical P&Ls is carried out on daily basis in order to assess their reliability and the performance of the VaR
models. To supplement the VaR figures, possible worst-case losses are also quantified by MRMD using historical
data. Sensitivity analysis are carried out to gauge the impact of extreme market movements on traded exposures,
and stress testing as per SBP guidelines is used to assess non-traded market risk, in particular interest rate risk in
the banking book. Market risk capital charge for the Bank is also calculated periodically using Basel II Standardized
Approach. The MRMD monitors risk by revaluing all traded market risk exposed positions on a daily basis, and the risk
is controlled by ensuring that these positions do not breach regulatory limits and the Bank’s own internally set limits.
page | 181
45.2.1 Foreign Exchange Risk
Foreign exchange risk is the risk that the earnings and / or capital will fluctuate due to changes in foreign exchange
rates. The Bank’s foreign exchange exposure consists of foreign currency cash in hand, balances with banks abroad,
forward contracts, purchase of foreign bills, foreign currency placements with State Bank of Pakistan (SBP), foreign
currency deposits and capital investments in offshore operations. The Bank manages its foreign exchange exposures
by matching foreign currency assets and liabilities. The net open position and nostro balances are maintained with
in statutory limits, as fixed by SBP and counterparty limits have been established to limit risk concentration. VaR is
calculated for consolidated foreign exchange exposure with Treasury on a daily basis. Daily sensitivity analysis of the
net open position to a change in ISD/ PKR parity is also carried out.
(Rupees in ‘000)
Pakistan Rupees
U.S. Dollars
Pound Sterling
Japanese Yen
Euro
Other European Currencies
Other Currencies 2009
Assets
Liabilities 219,432,514 20,471,471 1,133,695 4,377 2,651,783 6,826 735,580 207,362,707 26,407,639 2,569,138 968 2,682,898 – 8,292 244,436,246 239,031,642 Off-balance
sheet items
Net foreign
currency
exposure
6,905,996 (5,624,243)
(1,450,514)
63,406 (5,101)
– 110,456 18,975,803
(11,560,411)
(2,885,957)
66,815
(36,216)
6,826
837,744
– 5,404,604
45.2.2 Equity position risk
Equity position risk is the risk that the value of the Bank’s equity positions can change as a result of broad equity
market and security-specific movements. The Bank’s equity exposures are of three types: held for trading, available for
sale, and strategic.
Held for trading equity exposures are undertaken to earn profit through market imperfections and arbitrage
opportunities and hence of a short-term nature. Available for sale equity investments are made with the intent to
earn profit from company and industry fundamentals. Strategic investments are undertaken in line with long-term
strategy of the Bank. All equity positions in held for trading and available for sale portfolios are subject to exposure
limits established by the Bank in line with general limits prescribed by SBP in its Prudential Regulations. These limits
include intraday limits, stop-loss limits, exposure limits, portfolio limits, and sectoral limits. The equity exposures are
revalued and scrip-wise / portfolio VaR is calculated on a daily basis.
45.2.3 Yield / Interest Rate Risk in the Banking Book (IRRBB)-Basel II Specific
The Bank’s interest rate exposure originates from its investing, lending and borrowing activities. Interest rate risk in the
banking book is the risk of adverse changes in earnings and / or capital due to mismatched assets and liabilities in the
banking book. The Asset and Liability Management Committee (ALCO) of the Bank monitors and controls mismatch
of interest rate sensitive assets and liabilities. The MRMD calculates duration and convexity measures to assess the
impact of interest rate changes on its investment portfolio. VaR for the Bank’s debt investments is also generated on a
daily basis. Interest rate risk stress tests are conducted bi-annually to assess the impact of a parallel shift in the yield
curve on the Bank’s capital using sensitivity positions calculated using earlier of contractual re-pricing or maturity date
for on-balance sheet instruments, and settlement date for off-balance sheet instruments.
page | 182
45.2.4
Mismatch of interest rate sensitive assets and liabilities
Yield / interest rate sensitivity position for on-balance sheet instruments is based on the earlier of contractual repricing or maturity date and for off-balance sheet instruments is based on settlement date.
Rupees in ‘000
On-balance sheet financial instruments
Assets
Investments
Advances
Other assets
Effective Yield / Interest
rate
0.00%
1.30%
12.24%
12.17%
12.12%
–
2009
Exposed to yield/ interest risk Non-interest
Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 bearing
Upto 1 to 3 to 6 Months to 1 to 2 to 3 to 5 to 10 Above 10 financial
Total Month Months Months Year Years Years Years Years
Years instruments
19,385,850 4,832,003 – – – – – – – – 8,374,640 6,471,550 – – – – – – – – 4,649,059 3,249,486 1,399,573 – – – – – – – 66,885,617 3,633,773 10,687,076 12,162,099 15,998,536 5,705,520 4,091,785 7,540,537 2,596,553 – 135,039,901 20,468,813 29,638,308 33,324,055 35,945,251 560,336 442,848 2,398,499 2,935,106 9,326,685 10,101,179 – – – – – – – – – 244,436,246 38,655,625 41,724,957 45,486,154 51,943,787 6,265,856 4,534,633 9,939,036 5,531,659 14,553,847
1,903,090
–
4,469,738
–
10,101,179
9,326,685 31,027,854
Liabilities
Bills payable
Borrowings
Other liabilities
–
7.79%
6.65%
16.18%
12.32%
–
2,945,670 – – – – – – – – 19,300,163 6,554,983 9,320,127 3,425,053 – – – – – 205,912,903 47,043,658 26,173,565 19,785,819 20,526,212 13,947,064 14,040,258 17,876,201 36,484 5,994,900 – 300 775 1,075 2,150 2,150 2,993,200 2,995,250 11,543 4,866,463 188 – 383 – 593 – 1,259 – 2,787 – 2,995 – 3,338 – 239,031,642 53,598,829 35,494,375 23,212,240 20,528,546 13,952,001 14,045,403 20,872,739 – – –
–
–
–
– –
– 4,866,463
3,031,734 – 54,295,775
2,499,925 9,326,685 (23,267,921)
On-balance sheet gap Off-balance sheet financial instruments
Commitments to extend credits
Off-balance sheet gap
Total yield / interest risk sensitivity gap (17,846,940)
Cumulative yield / interest risk sensitivity gap (17,846,940) (11,616,358) 10,657,556 42,072,797 34,386,652 24,875,882 13,942,179 16,442,104 25,768,789 12.11%
11.96%
–
5,404,604 (14,943,204)
3,922,616 4,493,702 2,332,650 6,230,582 22,273,914 31,415,241 (7,686,145) (9,510,770) (10,933,703)
2,945,670
–
46,483,642
–
3,922,616 4,493,702 2,332,650 – – – – – – – – – – – – – – – – – – – – – – – – –
–
–
(2,903,736) (2,903,736)
– – – – – – – – –
6,230,582 22,273,914 31,415,241 (7,686,145) (9,510,770) (10,933,703)
2,499,925 9,326,685 (23,267,921)
2,500,868
45.2.4.1 Yield risk is the risk of decline in earnings due to adverse movement of the yield curve.
45.2.4.2 Interest rate risk is the risk that the value of the financial instrument will fluctuate due to changes in the market
interest rates.
page | 183
45.3 Liquidity Risk
Liquidity risk reflects an enterprises inability in raising funds to meet commitments. The Bank’s liquidity position is
managed by the Asset and Liability Management Committee (ALCO). ALCO monitors the maintenance of statement
of financial position liquidity ratios, depositors concentration both in terms of the overall funding mix and avoidance
of undue reliance on large individual deposits and liquidity contingency plans. Moreover, core retail deposits (current
accounts and saving accounts) form a considerable part of the Bank’s overall funding and significant importance is
attached to the stability and growth of these deposits.
Upto 1 Rupees in ‘000
Total Month Assets
Investments
Advances
Deferred tax assets
Other assets
Liabilities
Bills payable
Borrowings
Other liabilities
Net assets
Share Capital
Reserves
Surplus on revaluation of assets
Minority interest
page | 184
19,385,850 8,374,640 4,649,059 66,885,617 135,039,901 9,917,192 – 10,101,179 19,385,850 8,374,640 3,249,486 3,633,773 20,468,813 77,749 – 183,945 Over 1 to 3 Months 2009
Over 3 Over 6 to 6 Months to Months 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years Over 5
to 10 Years – – – – – – – –
– – – – – – – –
1,399,573 – – – – – – –
10,854,346 12,162,099 15,998,536 9,941,126 4,091,785 7,540,537 2,663,415 29,638,308 33,324,055 35,945,251 560,336 442,848 2,398,499 2,935,106 9,326,685
834,758 903,823 318,577 575,191 478,194 686,291 801,285 5,241,324
– – – – – – – –
6,611,666 136,308 3,023,585 145,675 – – – –
254,353,438 55,374,256 49,338,651 46,526,285 55,285,949 11,222,328 5,012,827 10,625,327 6,399,806 14,568,009
2,945,670 1,472,835 1,472,835 – – – – – – 19,300,163 6,554,983 9,320,127 3,425,053 – – – – – 205,912,903 57,691,242 31,497,355 25,427,418 26,167,810 20,751,347 19,361,440 24,979,807 36,484 5,994,900 – 300 775 1,075 2,150 2,150 2,993,200 2,995,250 11,543 333,925 4,866,463 188 (27,878)
3,467,895 383 – 1,229,084 593 – – 1,259 – 165,858 2,787 – – 2,995 – 1,088 3,338 361,803 1,088 239,365,567 69,159,265 43,520,084 28,853,839 26,336,002 20,756,284 19,367,673 28,339,236 14,987,871 (13,785,009)
5,073,467 7,234,318 856,439 1,806,384
17,263 14,987,871
Above 10
Years
5,818,567 17,672,446 28,949,947 (9,533,956) (14,354,846) (17,713,909)
– – 1,450 3,033,184 –
–
–
–
–
–
–
–
3,366,622 14,568,009
45.4 Operational risk
Operational risk is the possibility of financial losses occurring due to shortcomings or failure of internal processes, in
information technology or in people, or as a result of adverse external events. This definition includes legal risk but not
strategic risk or reputational risk.
Operational risk management is governed by well defined policy and procedures, integrated through a comprehensive
framework clearly communicated across the Bank;
Materialized actual loss arising from operational error, violation of regulator law / system, trouble, disaster, accident,
damage to tangible assets and external frauds are monitored by operational risk. Potential risks / losses are identified
and assessed through Key risk indicators and Risk and Control Self Assessment of branches and business and support
units.
Further, during the year number of policies and procedures have been reviewed to strengthen the system and
processes. One of the major component of operational risk being the potential of disruption to business operation
due to exceptional event that may disrupt system, infrastructure and human resource are given prime importance and
Business Continuity Plan has been revised to cater to current threats being faced.
45.4.1 Operational risk disclosures Basel II
The Bank approach in managing operational risk is to adopt practices that are fit for the purpose to suit the
organizational maturity and particular environments in which our business operates. Operational Risk Management
(ORM) has been entrenched to increase the efficiency and effectiveness of the Bank’s resources, minimize losses and
utilize opportunities.
46.
NON-ADJUSTING EVENTS AFTER THE BALANCE SHEET DATE
46.1 The Board of Directors in its meeting held on February 23, 2010 has proposed a cash dividend of Nil (2008: Nil). In
addition, the directors have also announced a bonus issue of 20 percent (2008: 25 percent). The appropriation will
be approved in the forthcoming Annual General Meeting. The financial statements for the year ended December 31,
2009 do not include the effect of the appropriation which will be accounted for in the financial statements for the year
ending December 31, 2010 as follows:
Rupees in ‘000
Transfer from unappropriated profit to:
Proposed dividend Reserve for issue of bonus shares General reserve Transfer from general reserve to:
Reserve for issue of bonus shares
2009
– – 856,439
1,071,240
2008
–
338,225
1,014,693
page | 185
46.2 During the year, the Bank initiated the process of amalgamation of Askari Leasing Limited (ALL) with and into the Bank.
The scheme of amalgamation under section 48 of the Banking Companies Ordinance, 1962 has been approved by the
shareholders of both companies in the Extra Ordinary General Meetings of the Bank and ALL held on December 21,
2009 and December 22, 2009 respectively and has also been subsequently approved by the Competition Commission
of Pakistan and the Securities and Exchange Commission of Pakistan. The final approval by the State Bank of Pakistan
has been received vide letter No. BPRD (R&P-02)/625-99/2010/1256 dated February 18, 2010, whereby the scheme
of amalgamation is effective within 30 days from the date of approval. The effective date of amalgamation will be
March 3, 2010 as per decision of the management of both entities. Consequently, the Bank shall issue 28.273 million
shares of the Bank to the shareholders of ALL.
47.
CORRESPONDING FIGURES
Previous year’s figures have been rearranged and reclassified where necessary for the purposes of comparison.
48.
GENERAL
48.1 Figures have been rounded off to the nearest thousand of rupees unless otherwise stated.
48.2 Captions as prescribed by BSD Circular No. 4 dated February 17, 2006 issued by the State Bank of Pakistan in respect
of which there are no amounts have not been reproduced in these financial statements except for the balance sheet
and profit and loss account.
49.
DATE OF AUTHORIZATION
These consolidated financial statements were authorised for issue on February 23, 2010 by the Board of Directors of
the Bank.
M. R. Mehkari
page | 186
Director
Director
Lt. Gen. Javed Zia
Chairman
Annexure-I
Referred to in note 10.7 to these financial statements
Statement in terms of sub-section (3) of section 33-A of the Banking Companies Ordinance, 1962 in respect of written off loans
or any other financial reliefs of Rs. 500,000 or above allowed to a person(s) during the year ended December 31, 2009.
(Rupees in ‘000)
Outstanding liabilities at the beginning of the year
Interest/
Sr. Name and address
Name of Individuals / Interest/
Principal
Mark-up
No. of the Borrower
Partners / Directors
Father’s / Husband’s Name
Principal
Mark-up
Other
Total Written-off Written-off
1 Mohib Exports Limited
8-KM, Managa, Raiwind Road, Kasur
2 A. H. International (Pvt) Limited
D-99, S.I.T.E, Karachi
3 Rasool Textile (Pvt) Limited
250-N, Model Town Extension,
Lahore
4 Shahanshah Trading Company
Shop # 28, A.Q. Market,
Sukkur
5 MIA Traders (Private) Limited
Flat # 5, Bashir Plaza,
Markaz I-9, Islamabad
6 Ali’s International
242/1 Sector-24,
Korangi Industrial Area, Karachi
7 Bakeline Products
Plot # 117, Street # 8,
Sector I-10/3, Islamabad
8 Shahzad Siddique (Pvt) Limited
4.5-KM, Jaranwala Road,
Khurrianwala,
Faisalabad
Arif Saigol
35202-9563094-9
Abid Saigol
270-92-006204
Asif Saigol
270-92-006202
M. Rafique Saigol
Muhammad Adan Shirazi
42301-8051825-9
Seema Shirazi
42301-655746-4
Malik Zain
42301-3375828-9
Mohsin Shirazi
Khalid Mahmood
35202-9557295-5
Zakia Khalid
35202-4495862-0
Ch. Ali Ahmed
Namo Mal
45504-0489491-9
Mavel Das
Muhammad Idrees
276-54-176702
Musarrat Ghazala
276-54-065860
Muhammad Ashraf
294-91-020493
Nasreen Ashraf
294-62-733932
Muhammad Mujeeb
502-55-614751
Fazal-ul-Qadir
101-57-137982
Ghulam Hassan
601-88-385774
Muhammad Rafiq
Qazi Rahat Ali
42301-9140443-9
Qazi Musarrat Ali
Fahad Hameed
210-67-419868
Faisal Hafeez Khan
210-67-234299
Abdul Hameed
9,818 7,357 –
17,175 9,818 7,357 1,246,268 201,118 – 1,447,386 700,096 9,150 2,743 –
11,893 3,976 1,101 –
28,692 27,759 10,000 582 Other
Financial
relief
provided
Total
–
17,175
201,118 –
901,214
–
1,965 –
1,965
5,077 –
551
–
551
–
56,451
–
27,451 –
27,451
2,707 - 12,707 - 2,707 - 2,707
1,411 - 1,993 - 1,363 - 1,363
Ali Muhammad Ch.
48,610 23,893 - 33100-6598842-7
Sheraz Siddique
33100-1704018-3
Shahzad Siddique
33100-1017331-1
72,503 33,053 23,893 - 56,946
- 1,625,185 742,967 266,405 M. Rafique Saigol
M. Rafique Saigol
Muhammad Adnan Shirazi
Malik Naseem Akhtar
Khalid Mahmood
Muhammad Idrees
Taj Din
Muhammad Ashraf
Muhammad Yasin
Ch. Ghulam Qadir
Khuda Dad
Abdul Hafeez
Total
1,357,096 268,089 - 1,009,372
page | 187
Annexure-II
Statement of Financial Position (Islamic Banking)
The Bank is operating 31 Islamic banking branches including 2 sub-branches at the end of 2009 as compared to 20 Islamic
banking branches including 2 sub-branches at the end of 2008. During the year one conventional banking branch was converted to Islamic banking branch.
Rupees in ‘000
2009
2008
Assets
Balances with and Due from Financial Institutions
Investments
Financing and Receivables
– Murahaba
– Ijarah
– Musharaka
– Diminishing Musharaka
– Salam
– Other Islamic Modes Other assets
655,346 1,232,181 2,314,008 402,465
260,738
2,388,729
650,043 1,863,205 – 3,323,294 22,069 13,681 950,884 901,983
2,087,884
–
3,116,617
139,098
12,253
724,014
Total Assets
11,024,711 10,033,781
Liabilities
Bills payable
Due to Financial Institutions
– Current Accounts
– Saving Accounts
– Term Deposits
– Others
– Deposit from Financial Institutions - remunerative
– Deposits from Financial Institutions - non remunerative
Due to head office
Other liabilities
77,331 - 41,216
520,000
935,296 2,028,559 3,647,582 2,945 838,591 4,417 1,882,383 689,235 861,287
1,396,961
1,743,848
2,777
1,393,078
8,364
2,653,575
658,995
10,106,339 9,280,101
Net assets
918,372 753,680
Islamic Banking Fund
Reserves
Unappropriated/ Unremitted profit/(loss)
850,000 –
68,372 700,000
–
53,680
Surplus/ (Deficit) on revaluation of assets
918,372 –
753,680
–
918,372 753,680
1,086 979
Opening Balance
Additions during the year
Payments/Utilization during the year
487 4,702 (2,818)
318
840
(671)
Closing Balance
2,371 487
Represented By
Remuneration to Shariah Advisor/Board
Charity fund
page | 188
Annexure-II
Profit and Loss Account (Islamic Banking)
Rupees in ‘000
2009
2008
Profit / return earned on financings, investments and placements
Return on deposits and other dues expensed
1,182,490 683,262 822,494
460,010
Net spread earned
499,228 362,484
Provision against non-performing financings
Provision for diminution in the value of investments
63,484 75,000 - 8,519
-
138,484 8,519
Income after provisions
360,744 353,965
Other Income
Fee, commission and brokerage Income
Dividend income
Capital gain on sale of securities
Unrealised gain / (loss) on revaluation of investments
Other income
12,288 - 2,154 - 13,184
1,256
-
- 22,507 18,172
Total other income
36,949 32,612
397,693 386,577
Other expenses
Other provisions / write offs
Other charges
383,001 - - 309,356
-
Total other expenses
383,001 309,356
Extra Ordinary / unusual items
14,692 - 77,221
-
14,692 77,221
page | 189
Shariah Advisor’s Report 2009
Alhamdolillah! The year 2009 has been a successful year for Askari Bank’s Islamic Banking Services, as eleven new full fledged
Islamic Banking Branches have been opened during the year, including conversion of Kohat Branch, from Conventional to
Islamic Banking. There are now 29 full fledged Islamic Banking Branches and 2 Islamic sub-branches, on a stand-alone basis.
As per Shariah requirements, special care is continuously taken, on an ongoing basis, to ensure that the funds and products
of Islamic Banking are managed separately from the conventional banking side. All funds obtained, invested and shared are
in Halal modes and investments, under my supervision as the Shariah Advisor of the Bank.
As a Shariah Advisor, I have reviewed each class of transactions conducted during the year. Relevant documentation and
procedures adopted in this connection have also reviewed and vetted by me. In order to facilitate this work, Shariah Audit and
Shariah Compliance departments are functioning under my supervision.
In my opinion, the affairs of Askari Bank Limited - Islamic Banking have been carried out in accordance with the rules and
principles of Shariah, SBP regulations and guidelines related to Shariah compliance and other rules, as well as with specific
fatawa and rulings issued by me, as the Shariah Advisor from time to time.
Besides, the allocation of funds, weightages, profit sharing ratios, profits and charging of losses (if any), relating to PLS
accounts also conform to the basis vetted by me as the Shariah Advisor, in accordance with the Shariah rules and principles.
Any earnings that have been realized from sources, or means, prohibited by Shariah rules and principles have been credited
to charity account.
We remain fully committed to contributing to capacity building and promoting the cause of Islamic Banking in Pakistan.
May Allah Almighty bless our sincere efforts!
page | 190
Shariah Advisor
Number of
shareholders
2,740 4,030 2,891 6,761 2,776 1,361 95 10 9
3
20 6
20,702 From
Shareholding
To
Total
shares held
1
101
501
1001
5001
10001
110001
345001
500001
800001
1135001
10290001
100
500
1000
5000
10000
110000
330000
490000
790000
985000
5940000
25452000
116,635
1,140,069
2,123,926
16,351,182
19,837,478
35,812,905
17,100,265
4,003,071
5,638,753
2,738,487
61,119,443
341,364,421
507,346,635
Number of
shareholders
Shares held
Percent
Categories of shareholders
Particulars
Individuals - Note 1
Investment / brokerage companies Insurance companies
Joint stock companies
Financial institutions
Modaraba and Mutual Funds
Charitable and other trusts
Foreign investors
Others
20,352 171 16 38 45 27 36 15 2
100,678,645 59,301,437 15,925,924 26,771,716 22,782,761 17,944,106 257,135,764 6,653,836 152,446 19.84
11.69
3.14
5.28
4.49
3.54
50.68
1.31
0.03
Total
20,702 507,346,635 100.00
Note 1: Individual include 8 directors holding 10,790 shares, detailed below, in their capacity as nominees of Army Welfare Trust
(AWT). The ultimate ownership remains with AWT.
Held by
Particulars
Number of
shareholders
Shares held
Percentage
Associated company
Army Welfare Trust
1
254,546,483 50.17
NIT / ICP
National Investment (Unit) Trust
Investment Corporation of Pakistan
1
1
23,208,217 9,381 4.57
0.00
Directors & Chief Executive
Lt. Gen. Javed Zia
Lt. Gen. (R.) Imtiaz Hussain
Lt. Gen. (R.) Saeed Ahmed Khan
Mr. Ali Noormahomed Rattansey
Mr. Shahid Mahmud
1
1
1
1
1
1
1
1
2,018 2,018 2,018 2,018 843 625 625 625 0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
8
13
10,790 62,878 0.00
0.01
Executives of the Bank
Public sector companies and corporations
Banks, Development Financial Institutions, Non- Banking Financial Institutions, Insurance Companies,
Modarabas and Mutual Funds (excluding NIT & ICP)
Individuals
Others
Total
- - 0.00
295 119,508,346 23.57
20,331 100,604,977 19.83
52 9,395,563 1.85
20,702 507,346,635 100.00
Note 2: There have been no trades in the shares of the Bank, carried out by it’s Directors, Chief Executive, Chief Financial Officer,
Company Secretary and their spouse and minor children.
page | 191
Askari Bank Limited
1. Algeria
15. Croatia
2. Argentina
16. Cyprus
Banque de l’ Agriculture et du
Development Rural
HSBC Bank Argentina SA
3. Armenia
HSBC Bank Armenia Jsc
4. Australia
Australia & Newzealand Banking Group
Commonwealth Bank of Australia
HSBC Bank Australia Ltd.
St. George Bank Limited
WestPac Banking Corporation
Citibank International Plc
Raiffeisen Zentralbank Osterreich (RZB)
UniCredit Bank Austria AG
5. Austria
6. Azerbaijan
The International Bank of
Azerbaijan Republic
7. Bangladesh
City Bank Ltd
Export Import Bank of Bangladesh
Prime Bank Ltd
Southeast Bank Ltd
United Commercial Bank Ltd.
Dexia Bank Belgium
Fortis Bank, NV/S.A
ING Belgium NV/SA
KBC Bank NV
8. Belgium
9. Bosnia Herzegovina
UniCredit Bank dd
10. Brazil
Banco Citibank SA
UniCredit Bulbank AD
11. Bulgaria
12. Canada
Banque National Du Canada
Canadian Imperial Bank of Commerce
HSBC Bank Canada
Habib Candain Bank
National Bank of Canada
Royal Bank of Canada
Toronto-Dominion Bank
13. Chile
BBV Banco BHIF
Banco de Credito
14. China
Agricultural Bank of China
Bank of China Ltd
Bank of Communications
China Construction Bank Corporation
China Merchants Bank
China Minsheng Banking Corporation
Export Import Bank of China
(EXIM Bank)
Guangdong Development Bank
Industrial and Commercial Bank
of China Ltd
Jinan City Commercial Bank
page | 192
Societe Generale-Splitska banka dd
Zagrebacka Banka dd
Cyprus Popular Bank Public
Company Ltd.
Hellenic Bank Public Company Ltd.
Marfin Popular Bank Public Co. Ltd.
17. Czech Republic
Ceskoslovenska Obchodni Banka as
Raiffeisenbank as
UniCredit Bank Czeck Republic
18. Denmark
Danske Bank Aktieselskab
Nordea Bank Denmark A/S
Spar Nord Bank
19. Egypt
Bank of Alexandria
20. Finland
Sampo Bank Plc
Nordea Bank plc
21. France
BNP Paribas SA
CALYON
Credit Lyonnais
Credit Agricole SA
HSBC France
Societe Generale
Union de Banques et de
Francaises (UBAF)
22. Germany
Bayerische Landesbank
Commerzbank A.G
Deutsche Bank, A.G
DZ Bank AG Deutsche Zentral Genoschaftsbank
Sparkasse Aachen
UniCredit Bank A.G.
WGZ-Bank AG Westdeutsche
Genossenschafts-Zentralbank
23. Greece
Alpha Bank AE
Marfin Egnatia Bank S.A.
24. Hong Kong
Bank of China (Hong Kong) Ltd
Bank of East Asia Ltd. (The)
Hang Seng Bank
Hong Kong & Shanghai Banking Corp.
Habib Finance International Limited
25. Hungary
Budapest Credit & Development Bank Rt
Citibank Zrt
UniCredit Bank Hungary Zrt
Raiffeisen Bank Zrt
26. India
ICICI Bank Ltd
Karur Vysya Bank Ltd., The
Punjab National Bank
State Bank of India
Tamilnad Mercantile Bank Limited
27. Indonesia
PT Bank Lippo TbK
PT Bank Mandiri (Persero) TbK
28. Ireland
Bank of Ireland
29. Italy
Banca Antonveneta SpA
Banca Intesa SpA
Banca Cassa Di Risparmio Di
Tortona SpA
Banca UBAE SpA
UniCredit SPA
30. Japan
Bank of Tokyo - Mitsubishi UFJ Ltd (The)
Mizuho Corporate Bank Ltd
Resona Bank Limited
Sumitomo Mitsui Banking Corp.
31. Jordan
Jordan Ahli Bank Plc
The Housing Bank for Trade & Finance
32. Kazakhstan
Alliance Bank Joint Stock Company
BTA Bank JSC
African Banking Corporation Ltd.
Kenya Commercial Bank
Stanbic Bank Kenya Ltd
33. Kenya
34. Korea (South)
Daegu Bank Ltd
Kookmin Bank
KorAm Bank
Korea Exchange Bank
Shinhan Bank
35. Kuwait
Al-Ahli Bank of Kuwait KSC
Bank of Kuwait and Middle East
Commercial Bank of Kuwait
Gulf Bank KSC
36. LebanOn
Byblos Bank SAL
Fransabank SAL
Banque Geneale De Luxemburg
37. Luxemburg
38. Malaysia
HSBC Bank Malaysia Berhad
Public Bank Berhad
Hong Leong Bank Berhad
RHB Bank Berhad
39. Mauritius
The Mauritius Commercial Bank
40. Mexico
HSBC Mexico SA
41. Monaco
BNP Paribas Private Bank Monaco
42. Morocco
Attijariwafa Bank
Banque Marocaine du Commerce
Exterieur SA
Citibank Maghreb
43. Nepal
Himalayan Bank Ltd
Bank of Asia Nepal Limited
Laxmi Bank Limited
44. Netherlands
Fortis Bank (Nederland) NV
F Van Lanschot Bankiers NV
ING Bank N.V.
Bank of New Zealand
ANZ National Bank Ltd.
45. New Zealand
46. Norway
DNB Nor Bank ASA
Nordea Bank Norge ASA
Bank Muscat SAOG
Bank Dhofar (S.A.O.G.)
Oman International Bank SAOG
47. Oman
48. Panama
HSBC bank Panama
49. Pakistan
Allied Bank of Pakistan
Atlas bank Limited
Bank Islami (Pakistan) Limited
Bank of Khyber, The
Bank of Punjab, The
Faysal Bank Limited
Habib Bank Ltd.
JS Bank Limited
KASB Bank Limited
MCB Bank Ltd.
Meezan Bank Limited
Habib Metropolitan Bank Limited
MYBank Limited
NIB Bank Limited
Silk Bank Pakistan
Soneri Bank Limited
United Bank Limited
RIZAL Commercial Banking Corporation
Security Bank Corporation
50. Philippines
51. Poland
Bank Polska Kasa Opieki SA
Bank Handlowy Warszawie SA
Bank BPH SA
BRE Bank SA
ING Bank Slaski SA
Raiffeisen Bank Polska SA
RBS Bank Polska SA
Banco BPI S.A
Banco Santander Totta SA.
Caixa Geral d Depositos SA
Caixa Central de Credito Agricola Mutuo
Caixa Económica Montepio Geral
Finibanco SA
52. Portugal
53. Qatar
Doha Bank Ltd.
Qatar National Bank
54. Romania
UniCredit Tiriac Bank SA
55. Russia
Bank of Moscow
Promsv Yazbank AKB ZAO
56. Saudi Arabia
Arab National Bank
Al-Rajhi Banking and Investment
Corporation
Banque Saudi Fransi
National Commercial Bank Ltd. (The)
Riyad Bank
Samba Financial Group
Saudi British Bank (The)
Saudi Hollandi Bank
68. Tunisia
Societe Tunisienne de Banque
Tunis International Bank
Finansbank AS
ING Bank AS
Turk Ekonomy Bankasi AS
Turkiye is Bankasi AS
Yapi ve Kredi Bankasi AS
69. Turkey
57. Singapore
70. Ukraine
58. Serbia and Montenegro
71. United Arab Emirates
United Overseas Bank
UniCredit Bank Serbia JSC
59. Slovakia
Citibank (Slovakia) as
Postova Banka as
UniCredit Bank Slovakia as
60. Slovenia
Banka Celje dd
Nova Ljubljanska Banka D.D.
SKB Banka DD
UniCredit Banka Slovenija dd
61. South Africa
ABSA Bank Ltd.
First Rand Bank Limited
HBZ Bank Limited
Habib Overseas Bank Limited
Standard Bank of South Africa
62. Spain
Banco Espanol de Credito SA
Banco Popular Espanol
Banco Santander Central Hispano SA
Citibank Espana S.A.
Confederacion Espanola
Bank of Ceylon
Hatton National Bank
Seylan Bank Ltd
Sampath Bank PLC
Union Bank of Colombo Limited
63. Sri Lanka
64. Sweden
Nordea Bank AB (Publ)
Swedbank A.B
Skandinaviska Enskilda Banken
Banca Commerciale Lugano
Banque de Comm. et de Placements SA
BNP Paribas (Suisse) SA
Banque Cantonale de Genève
Credit Suisse
Clariden Leu Ltd
Habib Bank AG Zurich
UBS AG
United Bank AG (Zürich)
Zuercher Kantonal Bank
65. Switzerland
66. Taiwan
Taiwan Cooperative Bank
Taichung Commercial Bank Ltd
Union Bank of Taiwan
67. Thailand
Bangkok Bank Public Co.
Kasikornbank Public Company Limited
The Siam Commercial Bank PCL
United Overseas Bank (Thai) PCL
JSCB Citibank (Ukraine)
Abu Dhabi Commercial Bank
Commercial Bank of Dubai
Dubai Islamic Bank
Emirates Islamic Bank
Emirates Bank International PJSC
MashreqBank Psc
National Bank of Fujairah
Union National Bank
72. United Kingdom
ABC International Bank Plc
Habib Allied International Bank Plc
Habibsons Bank Ltd.
HSBC Bank Plc
Lloyds TSB Bank plc
National Westminster Bank
Royal Bank of Scotland Plc
Standard Chartered Bank
United National Bank
73. U S A
Bank of New York
Bank of Oklahama, N.A.
Bank of the West
Citibank N.A
Compass Bank
Comerica Bank
First Tennessee Bank N.A
Habib American Bank
JP Morgan Chase Bank
M and T Bank
Royal Bank of Scotland Uzbekiston NB
74. Uzbekistan
75. Vietnam
Joint Stock Commercial Bank For
Fireugb Trade of Vietnam
Chohung Vina Bank
76. Yemen Arab Republic
International Bank of Yemen YSC
National Bank of Yemen
Saba Islamic Bank
Tadhamon International Islamic Bank
Yemen Gulf Bank
Yemen Bank for Reconstruction and
Development
277 Banks
of
76 Countries
of Origin,
as on December 31, 2009
page | 193
Askari Bank Limited
Branch Network
North Region
ISLAMABAD – AREA
Islamabad
Aabpara
Plot No. 4, Ghousia Plaza, I&T Centre,
Shahrah-e-Suharwardy, Aabpara,
Islamabad.
PABX: (051) 2603036-38
Direct: (051) 2603034
Fax: (051) 2603041
Islamabad Stock Exchange
55-B, Ground Floor, Islamabad Stock
Exchange Tower, Jinnah Avenue, Blue Area,
Islamabad.
PABX: (051) 2894021 - 23
Direct: (051) 2894026
Fax: (051) 2894024
F-7 Markaz
13-I, F-7 Markaz,
Jinnah Super Market,
Islamabad.
PABX: (051) 2654412-15, 9222411, 9222418
Direct: (051) 2654032
Fax: (051) 9222415
F-8 Markaz
Kiran Plaza, F-8 Markaz,
Islamabad.
PABX: (051) 2817182-4
Direct: (051) 2817180
Fax: (051) 2817185
F-10 Markaz
Block 5-C, F-10 Markaz,
Islamabad.
P.O. Box: 1324.
PABX: (051) 9073000
Direct: (051) 9267278
Fax: (051) 9267280
F-11 Markaz
Al-Karam Plaza, F-11 Markaz,
Islamabad.
PABX: (051) 2114254 – 56
Direct: (051) 2114251
Fax: (051) 2114257
I-9 Industrial Area
Plot No. 408, Main Double Road,
Sector I-9/3, Industrial Area,
Islamabad.
PABX: (051) 4100811-3
Direct: (051) 4100818
Fax: (051) 4100814
Jinnah Avenue
24-D, Rasheed Plaza, Jinnah Avenue,
Blue Area, Islamabad.
P.O.Box: 1499.
PABX: (051) 2271794-6, 2823943
Direct: (051) 2871144, 2271801
Fax: (051) 2271797
G-8 Markaz
12 H-1, G-8 Markaz, Islamamabd.
PABX: (051) 2282083 –85,
Direct: (051) 2255761,
Fax: (051) 2255761
page | 194
Sabzi Mandi
Plot No. 3 – B, Razzaq Plaza, Sabzi Mandi,
Sector I – 11/4, Islamamabd.
PABX: (051) 4438168 – 70
Direct: (051) 4438165
Fax: (051) 4438171
Barakahu
525 – Usman Plaza, Main Murree Road,
Barakahu District Islamamabd.
PABX:(051) 2233647-8
Direct: (051) 2233645
(Sub-Branch)
Directorate General – Inter Services
Intelligence (ISI), Shahrah-e-Suharwardy,
Islamabad
Mobile: (0333) 5288280
(Sub-Branch)
Capital Development Authority (CDA)
Old Naval Head Quarter, Melody Services
Block, Sector G – 6, Islamabad
Mobile: (0301) 8503993
(Sub-Branch)
Federal Government Employees Housing
Foundation (FGEHF)
Plot no. 10, Basement, Mauve Area, Sector
G-10/4, Islamabad
Direct: (051) 2100016
(Sub-Branch)
Overseas Pakistanis Foundation (OPF)
Ground Floor, G-5/2, Islamabad
PABX: (051) 9214026 – 27
Direct: (051) 9214024
Fax: (051) 9214025
(Sub-Branch)
NESCOM
Plot No. 94, H – 11/4, Islamabad
Direct: (051) 9017202
(Sub-Branch)
NCP Complex
Room No. 01, BOQ Building, NCP Complex,
Shahdara Road, Islamabad
Mobile: (0300) 5191488
RWP I – AREA
Rawalpindi
AWT Plaza
AWT Plaza, The Mall, Rawalpindi.
P.O. Box 1083,
PABX: (051) 9063150, 9273168-72
Direct: (051) 9273178, 9063200
Fax: (051) 9273180
Chaklala Scheme-III
18-Commercial Area,
Imran Khan Avenue,
Chaklala Scheme - III, Rawalpindi.
PABX: (051) 9281097-99
Direct: (051) 5960030
Fax: (051) 9281025
Haider Road
Bilal Plaza, Haider Road, Rawalpindi.
PABX: (051) 9272880-3
Direct: (051) 9272885
Fax: (051) 9272886
Peshawar Road
Zahoor Plaza, Peshawar Road, Rawalpindi.
PABX: (051) 9272794-99
Direct: (051) 9272702
Fax: (051) 9272704
Satellite Town
Midway Centrum, 6th Road Crossing,
Satellite Town, Main Murree Road,
Rawalpindi.
PABX: (051) 9290262-5
Direct: (051) 9290244
Fax: (051) 9290270
Lalkurti
Khadim Hussain Road, Lalkurti, Rawalpindi
PABX: (051) 5121466-69
Direct: (051)5519579
Fax: (051) 5121471
Shaheen Complex
Shaheen Complex, Rawal Road, Rawalpindi
PABX: (051) 9281377 – 79
Direct: (051)9281375
Fax: (051) 9281380
Wah Cantt.
POF Hotel, The Mall,
Wah Cantt.
PABX: (051) 4533272, 4533375
Direct: (051) 4533563
Fax: (051) 4533967
Kamra
Cantonment Board,
Mini Plaza, G.T.Road,
Kamra
PABX: (057) 9317393 – 6
Direct (057) 9317390
Fax: (057) 9317392
Pindi Gheb
Main Katcheri Road,
Pindi Gheb
Direct (057) 2352043
PABX: (057) 2352045
Fax: (057) 2352046
(Sub-Branch)
Project Management Organization (PMO)
Shop No. 1 to 3,
Commercial Complex, Gulshan Colony ,
PMO, Taxila
PABX: (051) 90652578
Direct: (051) 9065274
(Sub-Branch)
Main Hazroo Hattian Road,
Near Bus Stand Hazroo, Hazroo
Direct: (057) 2313486
Fax: (057) 2313487
(Sub-Branch)
Chaklala Garrison, Rawalpindi
10 Corps Head Quarter, Chaklala Garrison,
Rawalpindi
Mobile: (0321) 5246097
(Sub-Branch)
Kahota Research Laboratories (KRL),
Rawalpindi
Kahota Research Laboratories (KRL),
Head Quarter, ‘K’ Site, Near Khanna Pull,
Islamabad Highway, Rawalpindi
Mobile: (0333) 5115358
(Sub-Branch)
Hamza Camp, Rawalpindi
Hamza Camp (Inside Premises), Faizabad,
Murree Road, Rawalpindi
Mobile: (0333) 5288280
RWP II – AREA
Rawalpindi
Adyala Road
Main Adyala Road, Rawalpindi.
PABX: (051) 5948081-84
Direct: (051) 5948088
Fax: (051) 5948085
College Road
College Road, Rawalpindi.
PABX: (051) 5540234, 5540516
Direct: (051) 5870131
Fax: (051) 5540321
General Headquarters (GHQ)
Near Gate No. 7, GHQ, Rawalpindi.
PABX: (051) 9271739-40, 561-31192
Direct: (051) 9271738
Fax: (051) 9271541
DHA, Islamabad
DHA Mall, Jinnah Avenue,
Defence Housing Authority,
Phase – I, (Morgah), Islamabad.
PABX: (051) 5788693-94
Direct: (051) 5788691
Fax: (051) 5788695
(Sub-Branch)
Engineering in Chief (E in C Branch), GHQ,
Rawalpindi
Engineering in Chief (E in C Branch), General
Head Quarter (GHQ), R.A. Bazar, Rawalpindi
Mobile: (0321) 5352519
(Sub-Branch)
Bahria Town, Phase - VIII
Plot No. 35, Linear Commercial, Safari Valley,
Bahria Town, Phase - VIII, Rawalpindi
Mobile: (0300) 5143137
PESHAWAR – AREA
Abbottabad
Lala Rukh Plaza,
Mansehra Road, Abbottabad.
PABX: (0992) 332182-3
Direct: (0992) 332157
Fax: (0992) 332184
Dera Ismail Khan
Kaif Gulbahar Building,
A.Q. Khan Chowk,
Circular Road, Dera Ismail Khan.
PABX: (0966) 720180-81
Direct: (0966) 720178
Fax: (0966) 720184
Mardan
The Mall, Mardan,
P.O. Box: 197.
PABX: (0937) 9230501-02
Direct: (0937) 9230500
Fax: (0937) 9230503
Mingora, Swat
Talagang Road, Chakwal.
PABX: (0543) 553142-43
Direct: (0543) 551255
Fax: (0543) 601979
Opposite Park Hotel,
Makaan Bagh, Saidu Sharif Road,
Mingora, Swat.
PABX: (0946) 713358-59
Direct: (0946) 713356
Fax: (0946) 713361
Gujar Khan
Nowshera
Chakwal
B-III-360/1, G.T. Road, Gujar Khan.
PABX: (0513) 515671-74
Direct: (0513) 515905
Fax: (0513) 515676
Chashma
Plot No. 1 Bank Square,
Chashma Barrage Colony, Opposite PAEC
Chashma
Mianwali
Hospital Main D. I. Khan Road, Distt
Mianwali.
PABX: (0459) 241667
Direct: (0459) 241544
Fax: (0459) 242761
Plot No. 55 & 56, Ballo Khail Road, Mianwali
PABX: (0459)237903 – 4
Direct: (0459) 237901
Fax: (0459) 237905
(Sub-Branch)
Al-Shifa Eye Trust Hospital
Jhelum Road, Rawalpindi
Direct: (051) 5388018
PABX: (051) 5487820-5
Taj Building,
Main G.T. Road, Nowshera.
PABX: (0923) 9220300-301
Direct: (0923) 9220302
Fax: (0923) 9220304
Haripur
Shahrah-e-Hazara, Haripur
PABX: (0995) 627128 – 32
Direct: (0995) 616506
Fax: (0995) 616508
Allai
1st Floor, New Saadat Market,
Banna, Allai
Mobile: (0333) 5025995
Gilgit
Main Bazar, Airport Road,
Gilgit
Direct: (05811) 52021
Peshawar
Peshawar Cantt.
3-7, Fakhr-e-Alam Road, Cantt. Plaza
Branch, Peshawar.
P.O. Box: 606.
PABX: (091) 9212433-6
Direct: (091) 271653
Fax: (091) 5276391
Peshawar City
Bank Square, Chowk Yadgar,
Peshawar.
PABX: (091) 2561246-7
Direct: (091) 2560156
Fax: (091) 2561245
University Road
Block B, Al Haaj Tower, Jahangirabad,
University Road, Peshawar
PABX: (091) 9218587-90
Direct: (091) 9218594
Fax: (091) 9218591
(Sub-Branch)
Risalpur
Shop No. 105, 106 & 107, Cantt Plaza,
Gate No. 4, Risalpur Cantt, Tehsil & Distt
Nowshera
Direct: (0321) 9762340
Area –Azad Kashmir
Mirpur (Ak)
Plot No. 629-B,
Jabeer Tower, Bank Square Nangi, Mirpur,
Azad Kashmir
PABX: (05827) 445450 - 2
Direct: (05827) 437060
Fax: (05827)443394
Muzafarabad (AK)
Main Secretariat Road,
Muzafarabad, AJ&K
PABX: (05822) 920480 & 920487
Direct: (05822) 920486
Fax: (05822) 920484
Dadyal (AK)
City Centre, Main Bazar,
Dadyal, AJ&K
PABX: (05827) 446502-03
Direct: (05827) 456607
Fax: (05827) 456605
Chaksawari (AK)
Shahzad Hotel, Kotli Road, Chaksawari, AJ&K
PABX: (05827) 454735-36
Direct: (05827) 45470
Fax: (05827) 454737
Jatlan (AK)
Main Bazar, Jatlan,
Azad Kashmir
PABX: (05827) 404346 – 47
Direct: (05827) 404351
Fax: (05827) 404348
Jhelum
Plot No. 225 & 226,
Kohinoor Plaza,
Old G.T. Road, Jhelum Cantt.
PABX: (0544) 720053-55
Direct: (0544) 720051
Fax: (0544) 720060
page | 195
Askari Bank Limited
Branch Network
Kharian
Raza Building, Main G.T. Road. Kharian
PABX: (053) 9240235-7
Direct: (053) 9240134
Fax: (053) 7536288
Gulberg
10-E/II, Main Boulevard,
Gulberg-III, Lahore.
PABX: (042) 9231336-37,
Direct: (042) 9231330
Fax:(042) 9230035
(Sub-Branch)
Chowk Shaheedan, Mirpur
Plot No. 51-B, Nathia Building, Chowk
Shaheedan, Mirpur, Azad Kashmir
Direct: (05827) 435247
PABX: (05827) 435248
Fax: (05827) 435429
Main Market, Gulberg – II
32-E, Main Market,
Gulberg-II, Lahore
PABX: (042) 5787144 – 46
Direct: (042) 5787141
Fax: (042) 57871433
CENTRAL REGION
Qartaba Chowk
100-D, Lytton Road, Near Qartaba Chowk,
Mozang, Lahore
PABX: (042) 7314505
Direct: (042) 7314502
Fax: (042) 7314555
LAHORE-I – AREA
Lahore
D.H.A.
324-Z, Defence Housing Authority,
Lahore
PABX: (042) 5898891-5
Direct: (042) 5726818
Fax: (042) 5732310
D.H.A.Phase-II
Plot No. 53-T, Block CCA,
Phase-II C, DHA, Lahore.
PABX: (042) 5707558-59
Direct: (042) 5707556
Fax: (042) 5707563
DHA Phase - V
41-CCA (Central commercial Area), Defence
Housing Authority, Phase - V, Lahore Cantt
PABX: (042) 6183097
Direct: (042) 6183095
Fax: (042) 6183099
Model Town
2-4, Central Commercial Market,
Model Town, Lahore.
PABX: (042) 5850575-76, 5882099 &
5882048
Direct: (042) 5915494
Fax: (042) 5858564
M.A. Johar Town
473, Block G-III,
M.A. Johar Town, Lahore.
PABX: (042) 5290434-36
Direct: (042) 5313566
Fax: (042) 5313569
LAHORE-II – AREA
Lahore
Badami Bagh
165-B, Badami Bagh, Lahore.
PABX: (042) 7727601-2
Direct: (042) 7721318
Fax: (042) 7704775
Baghbanpura
6/7, Shalimar Link Road, Baghbanpura,
Lahore.
PABX: (042) 6830361-63
Direct: (042) 6830360
Fax: (042) 6830367
Circular Road
7-Circular Road, Lahore.
PABX: (042) 7635920-22
Direct: (042) 7633694, 7633702
Fax: (042) 7635919
Tufail Road
12-Tufail Road, Lahore Cantt.
PABX: (042) 9220940-46
Direct: (042) 9220930-31
Fax: (042) 9220947
Ravi Road
35-Main Ravi Road Lahore.
PAB X: (042) 7700516, 7709873-74
Direct: (042) 7731000
Fax: (042) 7700517
Allama Iqbal Town
14 – Pak Block, Allama Iqbal Town,Lahore.
PABX: (042) 7849926-27
Direct: (042) 7849847
Fax: (042) 7849854
Shahdara
N-127R-70C, Opposite Rustom Sohrab
Cycle Factory, Sheikupura Road, Shahdara,
Lahore.
PABX: (042) 7919302-04
Direct: (042) 7919300
Fax:(042) 7919306
Cavalry Ground
23, Commercial Area,
Cavalry Ground, Lahore.
PABX: (042) 6651290-96
Direct: (042) 6666665
Fax: (042) 6660729
Zarar Shaheed Road
6, Block – B, Guldasht Town, Zarar Shaheed
Road, Lahore
PABX: (042) 6632943 – 45
Direct: (042) 6632941
Fax: (042) 6632950
page | 196
Shad Bagh
Chowk Nakhuda, Umar Din Road,
Wassanpura, Shad Bagh Lahore
PABX: (042) 7289430, 7285343, 6260159
Direct: (042) 7604071
Fax: (042) 6264225
Shah Alam Market
5-C, Fawara Chowk,
Shah Alam Market, Lahore.
PABX: (042) 7642652-54
Direct: (042) 7642650
Fax: (042) 7642656
Shahrah-E-Aiwan-E-Tijarat
7-A, Shahrah-e-Aiwan-e-Tijarat, Lahore.
PABX: (042) 9203673-77
Direct: (042) 9203081
Fax: (042) 9203351
Bank Square, The Mall
47, Bank Square, The Mall,
(Shahrah-e-Quaid-e-Azam), Lahore
PABX: (042) 7211851-5
Direct: (042) 7314196, 7211860
Fax: (042) 7211865
Urdu Bazar
6 – Chatterjee Road, Faqir Plaza, Urdu Bazar,
Lahore
PABX: (042) 7247762
Direct: (042) 7247771
Fax: (042) 7247766
Township
48/10, B-I, Akbar Chowk, Township,
PABX: (042) 5140520-22
Direct: (042) 5151279
Fax: (042) 5124222
SAHIWAL – AREA
Phool Nagar
Plot Khasra No. 1193,
Main Multan Road, Distt. Kasur, Phool
Nagar.
PABX: (049) 510437
Direct: (049) 510431
Fax: (049) 510436
OKARA
M.A Jinnah Road,
Chak No. 2/42, M.A. Jinnah Road, Tehsil &
District Okara.
PABX:(044) 9200317-18
Direct: (044) 2550002
Fax: (044) 9200316
Okara Cantt
117 – D, Shahrah-e-Quaid-e-Azam,
Civil Area, Okara Cantt.
PABX: (044) 2881645 & 2880358
Direct: (044) 2881644
Fax: (044) 2881740
Depalpur
Katchery Road, Depalpur, Distt. Okara
PABX: (0444) 541543 – 4
Direct: (0444) 541541
Fax: (0444) 541545
Sahiwal
48/B & B1, High Street Branch, Sahiwal.
PABX: (040) 447738-39
Direct: (040) 4467748
Fax: (040) 4467746
Burewala
95 / 1C, College Road, Burewala.
PABX: (067) 3772206-8
Direct: (067) 3772252
Fax: (067) 3772204
Vehari
Pir Mahal
Dera Ghazi Khan
13, E Block, Karkhana Bazar, Vehari.
PABX: (067) 3366718 - 9
Direct: (067) 3360727
Fax: (067) 3366720
Kitta # 3, Pir Mahal,
Tehsil Kamalia District Toba Tek Singh
PABX: (0463) 3366282
Direct: (0463) 3366280
Fax: (0463) 3366284
Jampur Road,
Dera Ghazi Khan
PABX: (064) 9260669 – 70
Direct: (064) 9260675
Fax: (064) 9260674
FAISALABAD - AREA
Dijkot
Layyah
Chak No. 266 RB, Faisalabad Road, Dijkot,
Distt. Faisalabad
PABX: (041) 2672286
Direct: (041) 26722852
Fax: (041) 2672288
Chowk Azam, Distt. Layyah
Mohallah Awan Colony, Chowk Azam, Tehsil
& Distt. Layyah
PABX: (0606) 380112 – 3
Direct: (0606) 372321
Fax: (0606) 380114
MULTAN – AREA
(Sub-Branch)
Shop No. 1 - 2, Main Shopping Complex,
Dera Ghazi Khan Cantt.,
Dera Ghazi Khan
Direct: (064) 2474002
PABX: (064) 2474004
Fax: (064) 2474003
Jhang
Church Road, Saddar, Jhang.
PABX: (047) 7621150, 7610852
Direct: (047) 7623652
Fax: (047) 7621050
Sargodha
80-Club Road,
Old Civil Lines, Sargodha.
PABX: (048) 3725490, 3725590
Direct: (048) 3722728
Fax: (048) 3725240
Toba Tek Singh
596 – Mohallah Chamra Mandi,
Jhang Road,
Toba Tek Singh.
PABX: (0462) 516120 – 1
Direct: (0462) 516131
Fax: (0462) 516142
Faisalabad
Khurrianwala
Jhumra Road, Khurrianwala,
Tehsil Jaranwala, Distt. Faisalabad.
Direct: (041) 4000029
Fax: (041) 4364030
Peoples Colony
Peoples Colony, Faisalabad.
PABX: (041) 8739326-7
Direct: (041) 8739323
Fax: (041) 8739321
University Road
University Road, Faisalabad.
P.O. Box 346.
PABX: (041) 9201008-11
Direct: (041) 9201001
Fax: (041) 9201006
Satayana Road
585 – I, Block B, Peoples Colony # 1.
Satayana Road, Faisalabad
PABX: (041) 8559205
Direct: (041) 8559101
Fax: (041) 8559103
Chiniot
Chah Dargahi Wala,
Chiniot No. 02,
Chiniot PABX: (0476) 6336377 – 8
Direct: (0476) 6336277
Fax: (0476) 6336279
Bhalwal
Main Bhalwal Road,
Bhalwal
PABX: (048) 6644695 – 6
Direct: (048) 6644693
Fax: (048) 6644697
Multan
Abdali Road
64/A-1, Abdali Road, Multan.
PABX: (061) 9201391-94
Direct: (061) 9201399
Fax: (061) 9201395
Bosan Road
Plot No. 23, Near Multan Law College, Bosan
Road, Multan.
PABX: (061) 6510435-37
Direct: (061) 6510434
Fax: (061) 6510438
Bahawalpur
1-Noor Mahal Road,
Bahawalpur.
PABX: (062) 9255320-22
Direct: (062) 9255325
Fax: (062) 9255324
Khanewal
DAHA Plaza
Chowk Markazi, Khanewal.
PABX: (065) 9200274-76, 9200271
Direct: (065) 9200277
Fax: (065) 9200273
Rahim Yar Khan
Ashraf Complex, Model Town,
Rahim Yar Khan.
PABX: (068) 5879851-53
Direct: (068) 5879848
Fax: (068) 5879850
Sadiqabad
78-D, Allama Iqbal Road,
New Town, Sadiqabad.
PABX: (068) 5802377-78
Direct: (068) 5802387
Fax: (068) 5802374
Channi Goth
Uch Road, Channi Goth,
Tehsil Ahmedpur East, District Bahawalpur
PABX: (062) 2783008 – 9
Direct: (062) 2783444
Hasilpur
Baldia Road, Hasilpur
PABX: (062) 2448030
Direct: (062) 2448002
Fax: (062) 2448035
GUJRANWALA – AREA
Gujranwala
G.T. Road
G.T. Road, Gujranwala.
PABX: (055) 9200855-56,
(055) 9200861-62
Direct: (055) 9200857
Fax: (055) 9200858
Gujranwala Cantt
Kent Plaza, Quaid-e-Azam Avenue,
Gujranwala Cantt.
PABX: (055) 3865371 - 72,
Direct: (055) 3865988
Fax: (055) 3865994
Gujrat
Hassan Plaza, G.T. Road,
Gujrat.
PABX: (053) 3530164-5
Direct: (053) 3530178
Fax: (053) 3530179
Jalalpur Bhattian
Ghala Mandi, Jalalpur Bhattian.
PABX: (0547) 501013-14
Direct: (0547) 501012
Fax: (0547) 501015
Sheikhupura
Property No. B-IX-6S-44,
Main Lahore-Sargodha Road,
Sheikhupura.
PABX: (056) 3788031 & 3788071
Direct: (056) 3788037
Fax: (056) 3788084
Mandi Bahauddin
Dr. Sakina Rizvi Road,
Mandi Bahauddin,
PABX: (0546) 600385, 386
Direct: (0546) 600728
Fax: (0546) 600387
Lalamusa
G.T. Road, Lalamusa
PABX: (0537) 519690 –91
Direct: (0537) 519694
Fax: (0537) 519693
page | 197
Askari Bank Limited
Branch Network
Kamonkey
G.T. Road, Kamonkey
PABX: (055) 6816080,81,82
Direct: (055) 6816078
Fax: (055) 6816083
Sialkot
Sialkot Cantt
Tariq Road, Sialkot Cantt.
PABX: (052) 4299001-03,
Direct: (052) 4299005
Fax: (052) 4299004
Sialkot City
Paris Road, Sialkot, P.O. Box 2890.
PABX: (052) 4262806-08
Direct: (052) 4265522
Fax: (052) 4299004
Daska
Rest House Chowk,
Gujranwala Road, Daska, Distt. Sialkot
PABX: (052) 6615815
Direct: (052) 6613634
Fax: (052) 6615842
SOUTH REGION
KARACHI-I – AREA
Karachi
Cloth Market
Laxmidas Street, Karachi,
PABX: (021) 2472611-5
Direct: (021) 2472607
Fax: (021) 2472605
Jodia Bazar
Abdullah Mansion, Bombay Bazar,
Jodia Bazar, Karachi
PABX: (021) 2474851-55
Direct: (021) 2473498
Fax: (021) 2471224
M.A. Jinnah Road
Survey No. 4, Sheet No. RB-7, Aram Bagh
Quarters,
M.A. Jinnah Road, Karachi.
PABX: (021) 2217531-34
Direct: (021) 2217490
Fax: (021) 2217494
Marriot Road
Rawalpindiwala Building,
Marriot Road, Market Quarters, Karachi.
PABX: (021) 2418425-28
Direct: (021) 2418412
Fax: (021) 2418420
New Challi
Abdullah Square Building,
Shahrah-e-Liaquat, New Challi, Karachi.
PABX: (021) 2471042-44
Direct: (021) 2471021
Fax: (021) 2471023
North Napier Road
Ishaq Chamber, North Napier Road, Karachi.
PABX: (021) 2549581-2
Direct: (021) 2549588
Fax: (021) 2549585
page | 198
Saima Trade Tower
I.I. Chundrigar Road, Karachi.
P.O. Box 1096.
PABX: (021) 2630731-3,
(021) 2624316, 2634610
Direct: (021) 2624714, 2631178
Fax: (021) 2631176
Khayaban-e-Sehar
Plot No. 2C, Sehar Lane No. 04, Khayaban-eSehar, DHA Phase – VII, Karachi
PABX: (021) 5847239 –41, 5847012 – 1,
5847251 –52
Direct: (021) 5847446
Fax: (021) 5847022
Timber Market
Plot No. LA-7/116,
Siddiq Wahab Road, Timber Market,
Lawrence Quarters, Karachi.
PABX: (021) 2770784-85, 2770737
Direct: (021) 2770800
Fax: (021) 2770055
DHA Phase – IV
9th Commercial Street, DHA Phase – IV,
Karachi.
PABX: (021) 5313055 – 58
Direct: (021) 5313091
Fax: (021) 5313059
Karachi Stock Exchange
Office No. 55 & 56,
Old Stock Exchange Building, Karachi
PABX: (021) 2446050-51,2446053-54
Direct: (021) 2446550
Fax: (021) 2446559
Paper Market
Plot No. 21, Frere Road,
Shahrah-e-Liaquat, Serai Quarter, Karachi
PABX: (021) 2600909 – 11
Direct: (021) 2600901
Fax: (021) 2600912
KARACHI-II – AREA
Karachi
Badar Commercial Area
29-C, Badar Commercial Area, Street No. 1,
Phase-V, DHA, Karachi - 75500.
PABX: (021) 5344175-77
Direct: (021) 5344171
Fax: (021) 5344174
Clifton
Marine Trade Centre, Block-9, Clifton,
Karachi.
P.O. Box 13807.
PABX: (021) 5868551-4 & 5832916
Direct: (021) 5862868
Fax: (021) 5868555
Khayaban-e-Ittehahad, DHA
Plot No. 25 – C, ,Khayaban-e-Ittehad, Phase
– II Extension, Defence Housing
Authority, (DHA), Karachi.
PABX: (021) 5387491 – 2
(021) 5384902 – 5
Direct: (021) 5387493
Fax: (021) 5387814
Korangi Industrial Area
Plot No. ST 2/3, Sector 23,
Main Korangi Road,
Korangi Industrial Area, Karachi.
PABX: (021) 5115024-26
Direct: (021) 5115020
Fax: (021) 5115027
Saddar
Sindh Small Industries Building,Regal
Chowk, Saddar, Karachi.
PABX: (021) 2762840-2, 2741396-7
Direct: (021) 2760506
Fax: (021) 2760992
Bismillah Chowrangi, Korangi
R – 01, Sector No. 36 E, Bismillah Chowrangi,
Area 5 D, Korangi No. 06, Karachi.
PABX: (021) 5049330 – 31
Direct: (021) 5049210
Fax: (021) 5049352
Khayban-e-Bokhari, DHA Phase – VI
43 – C, Khayaban-e-Bokhari, DHA Phase –
VI, Karachi.
PABX: (021) 5242747 – 50
Direct: (021) 5242745
Fax: (021) 5242754
(Sub-Branch)
PTA, Korangi
ST: 7, 7 – A, Sector Pakistan Tanners
Association, Korangi Industrial Area, Karachi
Direct: (021) 5116120
Fax: (021) 5116121
KARACHI-III – AREA
Karachi
Atrium Mall
249- Staff Lines,
Fatima Jinnah Road, Karachi.
PABX: (021) 5650953, 5651046,
(021) 5651048, 5651091
Direct: (021) 5650940
Fax: (021) 5651207
Bahadurabad
Zeenat Terrace, , Block No. 3, Bahaduryar
Jang Society, Bahadurabad, Karachi.
PABX: (021) 9232565-68
Direct: (021) 9232569
Fax: (021) 9232574
Federal B Area
Plot No. ST-2/B, Block No. 14, Al-Siraj
Square,
Federal B Area, Karachi.
PABX No. (021) 6806091-92
Direct (021) 6806152
Fax: (021) 6806095
Malir Cantt.
Malir Cantt. Karachi.
PABX: (021) 4491603 – 7
Direct: (021) 4491601
Fax: (021) 4491609
Marston Road
Shafiq Shopping Plaza,
Marston Road, Karachi.
PABX: (021) 2745722-4
Direct: (021) 2745772
Fax: (021) 2745644
Shaheed-e-Millat
A/22, Block No. 7 & 8, Anum Pride, K.C.H.S
Commercial Area, Main Shaheed-e-Millat
Road, Karachi.
PABX: (021) 4392875-76 & 4392887
Direct: (021) 4392850
Fax: (021) 4392886
Hydri North Nazimabad
Plot No. 5F/14-18, Al Burhan Arcade,
Block-E, Barkat-e-Hydri, North Nazimabad,
Karachi.
PABX: (021) 6632904-6
Direct: (021) 6632920
Fax: (021) 6632922
Shahrah-e-Noor Muhammad Market,
C.S. Nos. 2611/1&2611/2
Shahrah-e-Noor Muhammad
Market, Hyderabad
PABX: (022) 2784852, 2783615
Direct: (022) 2613192
Fax: (022) 2613193
Shahrah-e-Faisal
11-A, Progressive Square, Block 6,
P.E.C.H.S., Karachi.
PABX: (021) 4520026-9
Direct: (021) 4526641
Fax: (021) 4520030
Metroville
G-50, Block – 3, Metroville, Karachi.
PABX: (021) 6762532-5
Direct: (021) 6762541
Fax: (021) 6762527
Jacobabad
Tariq Road
Plot No. 299 – C & 300 – C, Block No. 2,
P.E.C.H.S, Main Tariq Road, Karachi
PABX: (021) 4301888-95,
Direct: (021) 4301887
Fax: (021) 4301896
Makro Saddar
148/1, Opposite 603 Workshop, Mubarak
Shaheed Road, Saddar, Karachi
PABX: (021) 2792473 – 79
Direct: (021) 2792471
Fax: (021) 2792480
Mehmoodabad
Plot No. 1045, Street No. 4, Mehmoodabad,
Karachi
PABX: (021) 5315725 – 27
Direct: (021) 5315729
Fax: (021) 5315728
(Sub-Branch)
SBTE, Karachi
Plot No. ST-22, Block-6, Sindh Board of
Technical Education (SBTE), Gulshan-e-Iqbal,
Karachi
Direct: (021) 34974230
Fax: (021) 34974239
KARACHI-IV – AREA
Karachi
Bohra Pir
Plot No. 22/1, Princess Street, Bohra Pir,
Ranchore Line, Karachi.
PABX: (021) 2744768-69
Direct (021) 2745961
Fax: (021) 2744779
Gabol Town
Plot No. 1, Sector 12-B,
North Karachi Industrial Area, Karachi
PABX: (021) 6950332
Direct: (021) 6950335
Fax: (021) 6950333
Gulistan-e-Jauhar
Asia Pacific Trade Centre,
Rashid Minhas Road,
Karachi. P.O. Box: 75290.
PABX: (021) 4632500-04
Direct: (021) 4630166
Fax: (021) 4632505
Gulshan-e-Iqbal
University Road,
Gulshan-e-Iqbal, Karachi.
PABX: (021) 9244365-69
Direct: (021) 9244361
Fax: (021) 9244370
S.I.T.E.
B-17, Estate Avenue, S.I.T.E, Karachi.
PABX: (021) 2585914-17
Direct: (021) 2585911
Fax: (021) 2585525
Manghopir
Plot No. ST – 2, Islamia Colony No. 1,
Manghopir, Karachi
PABX: (021) 6661654, 6697208, 6693844,
Direct: (021) 6693385
Fax: (021) 6668209
Gulshan Chowrangi, Gulshan-e-Iqbal
Plot No. FL-3/TH-8, KDA Scheme – 24,
Allama Shabir Ahmed Usmani Road,
Block – 3, Gulshan Chowrangi, Gulshan-eIqbal, Karachi
PABX: (021) 4834082 – 88
Direct: (021) 4834080
Fax: (021) 4834089
Nagan Chowrangi
R – 429, Sector 11/C-1, North Karachi
Township, Karachi
PABX: (021) 6950020 – 25
Direct: (021) 6950015
Fax: (021) 6950026
(Sub-Branch)
Stadium Road, Guslhan-e-Iqbal
Plot No. ST-2D, Block - 17, Indus Institute of
Higher Education, Gulshan-e-Iqbal, Karachi
Direct: (021)34974260
Fax: (021) 34974261
HYDERABAD - AREA
Daharki
1276, Main Road, Zafar Bazar,
Daharki, Distt. Ghotki.
PABX: (0723) 641266
Direct: (0723) 642626
Fax: (0723) 42260
Ghotki
Plot No. D-9, Deh Odher Wali,
Qadirpur Road,
Opposite Town Committee, Ghotki.
PABX: (0723) 600500
Direct: (0723) 600707
Fax: (0723) 600526
Hyderabad
Saddar
332-333, Saddar Bazar, Hyderabad.
P.O Box 470.
PABX: (022) 2783616, 2783618,
(022) 2784852, 2783615
Direct: (022) 2783615
Fax: (022) 2784760
Ward No. 05, Quaid-e-Azam Road,
Jacobabad.
PABX: (0722) 651866 – 67
Direct: (0722) 652266
Fax: (0722) 650344
Kandhkot
Plot No. 29/1, Tower Road,
Kandhkot
PABX: (0722) 572361 & 572367
Direct: (0722) 571644
Fax: (0722) 573788
Larkana
Bunder Road, Larkana.
PABX: (074) 4053823-24,
(074) 4045381-2
Direct: (074) 4053676
Fax: (074) 4045371
Mirpurkhas
C.S. 835, Ward B, M.A. Jinnah Road,
Mirpurkhas.
PABX: (0233) 9209031-32
Direct: (0233) 9290333
Fax: (0233) 9290335
Nawabshah
Katchary Road, Nawabshah.
PABX: (0244) 9370460-64
Direct: (0244) 9370466
Fax: (0244) 9370467
Sukkur
Sarafa Bazar, Sukkur.
PABX: (071) 5628267-8
Direct: (071) 5627218
Fax: (071) 5627219
Tando Allahyar
City Survey No. 1610/12.
Ward “B”, Qaimabad,
Tando Allahyar
PABX: (022) 3899223 – 26
Direct: (022) 3892963
Fax: (022) 3892962
Khairpur
Plot No. B -265 (T-342-A),
C.S. No. 46, Mullah New Goth, Katachery
Road, Khairpur
PABX: (0243) 553913 – 4
Direct: (0243) 715903
Fax: (0243) 553915
Shikarpur
Plot No. 5/137/1, 138, Circular Road, Store
Ganj, Shikarpur
PABX: (0726) 513258 – 9
Direct: (0726) 513261
Fax: (0726) 513260
page | 199
Askari Bank Limited
Branch Network
Pak Camp, Petaro
Pak Camp, Tufail Road, Petaro, Tehsil Kotri,
District Jamshoro
Mobile: (0300) 3033226
QUETTA – AREA
Quetta
Cantt.
Bolan Complex, Chiltan Road, Quetta Cantt.
PABX: (081) 2882101-102
Direct; (081) 2882105
Fax: (081) 2882100
Hazar Ganji
Fruit Market, Hazar Ganji, Quetta.
PABX: (081) 2460808
Direct: (081) 2460806
Fax: (081) 2460807
Corporate Banking
Karachi
Bahria Complex III, Karachi
Plot No. 1/F, Bahria Complex III, Moulvi
Tamizuddin Road, Karachi
PABX: (021) 5615289-96
Direct: (021) 5615306
Fax: (021) 5615298
Lahore
Park Lane Towers, Lahore
172, Park Lane Towers,
Lahore
PABX: (042) 6622491 –95
Direct: (042) 6622481
Fax: (042) 6622490
Islamabad
M.A. Jinnah Road
M.A. Jinnah Road,
Quetta.
PABX: (081) 2843751-2
Direct: (081) 2844374
Fax: (081) 2824602
Razia Sharif Plaza, Blue Area, Islamabad
Plot No. 90-93, Ground Floor, Razia Sharif
Plaza, Jinnah Avenue, Blue Area, Islamabad
PABX: (051) 2273596 - 99
Direct: (051) 2273591
Fax: (051) 2273162
Masjid Road
Cut Piece Gali No. 7,
Cloth Market, Quetta - 87300.
PABX: (081) 2824008-09
Direct: (081) 2824004
Fax: (081) 2845227
Overseas Operations
Meezan Chowk
Liaqat Bazar, Meezan Chowk, Quetta.
PABX: (081) 2668386-87
Direct: (081) 2665985
Fax: (081) 2668389
Satellite Town
Kasi Plaza, Sirki Road,
Satellite Town, Quetta.
PABX: (081) 2451535-36
Direct: (081) 2451530
Fax: (081) 2451538
Samungly Road
Plot No. 01, Shop No. 1 to 5, Night Star
Complex, Samungly Road, Quetta.
PABX: (081) 2870086
Fax: (081) 2870104
Chaman
Trunch Road, Off Mall Road,
Chaman, (Balochistan).
PABX: (0826) 613330
Direct: (0826) 614447
Fax: (0826) 613331
Gawadar
Airport Road, Gawadar.
PABX: (0864) 211359-60
Direct: (0864) 211357
Fax: (0864) 211358
Bahrain “Wholesale Bank (Branch)”
P.O. Box 11720, Diplomatic Area,Manama
Kingdom of Bahrain.
Tel: (00973) 17530500
Direct: (00973) 17535439
Fax: (00973) 17532400
Islamic Banking
Branches
Islamabad
Jinnah Avenue
38 – Zahoor Plaza, Jinnah Avenue, Blue Area,
Islamabad.
Direct: (051) 9211467
PABX: (051) 9211469-74
Fax: (051) 9211476
(Sub-Branch)
F – 10 Markaz
Unit No. 5, Plot No. 1-W, Ground Floor, Main
Double Road, F-10 Markaz, Islamabad
Direct: (051) 2111902
PABX: (051) 2111904-5
Fax: (051) 2111839
Rawalpindi
Chandani Chowk
149-B, Chandani Chowk,
Murree Road, Rawalpindi.
Direct: (051) 9291095, 9291096
PABX: (051) 9291091-4
Fax: (051) 9291097
Bank Road
Plot No. 24, Bank Road, Saddar, Rawalpindi.
Direct: (051) 5120240
PABX: (051) 5120243-4
Fax: (051) 5120241
page | 200
Karachi
Jodia Bazar
Buidling MR-3/30, Qazi Usman Road,
Near Lal Masjid, Karachi.
Direct: (021) 2421145, 2421146
PABX: (021) 2410025-29
Fax: (021) 2421147
North Nazimabad
Plot No. D-5, Block – L,
North Nazimabad, Karachi
Direct: (021) 6640972
PABX: (021) 6646356,
(021) 36640122
Fax: (021) 6641390
DHA
106 – C, Jami Commercial Street – 11, Phase
VII, Pakistan Defence Officers Housing
Authority, Karachi
Direct: (021) 35311813
PABX: (021) 35311788-9
Fax: (021) 35311790
S.I.T.E
Shop No. 3, Plot No. E-2, Estate Avenue,
S.I.T.E, Karachi
Direct: (021) 2551112
PABX: (021) 32551115-7
Fax: (021) 2551114
(Sub-Branch)
Shahrah-e-Faisal
Shop No. 7, Plot No. 110, Block ‘A’, Amber
Plaza, SMCHS, Crossing Shahrah-e-Faisal,
Karachi
Direct: (021) 4544948
PABX: (021) 34544949-50
Fax: (021) 4544953
Abdullah Haroon Road,
Shop No. 5, Abdullah Haroon Road, Saddar,
Karachi
Direct: (021) 32711500
PABX: (021) 32711506-7
Fax: (021) 32711502
Clifton Branch
Shop No. 13 & 14, Mehran Heights Blocks-8,
KDA Scheme # 5, Clifton, Karachi
Direct: (021) 35823377
PABX: (021) 358296252-3
Fax: (021) 35823379
Hyderabad
Main Risala Road
F-73 & 74, Main Risala Road, Hyderabad
Direct: (022)2730961
PABX: (022) 2730962
Fax: (022) 2730970
Lahore
Circular Road
Near Ram Gali, Circular Road, Lahore
Direct: (042) 37379301
PABX: (042) 37379303 – 9
Fax: (042) 37379310
Gulberg
Plot no. 5 – B, Main Gulberg,
Near EFU Building, Jail Road, Lahore
Direct: (042) 99263393
PABX: (042) 99263416 – 20
Fax: (042) 99263420
DHA
155, Block Y, Phase – 3C, Defence Housing
Authority, Lahore Cantt.
Direct: (042) 99264238
PABX: (042) 9926423-5
Fax: (042) 5692729
Qandhari Bazar
Qandhari Bazar, Shahrah-e-Iqbal Quetta.
Direct: (081) 2826124
PABX: (081) 2826041-42
Fax: (081) 2826125
Peco Road
Plot No. 875, Block – D, Faisal Town, Peco
Road, Lahore
Direct: (042) 5221751
PABX: (042) 5221756 – 57
Fax: (042) 5221758
Abdali Road
Shop No. 33& 34, Khan Centre, Abdali Road,
Multan
Direct: (061) 4500262
PABX: (061) 4500263 – 7
Fax: (061) 4783093
Azam Cloth Market
Plot No. F-1079,F-1080, MashAllah Centre,
Opposite Azam Cloth Market, Dehli Gate,
Lahore
Direct: (042) 37630928
PABX: (042) 37630925-28
Fax: (042) 37630910
M.A. Johar Town
Plot No. 77, Block – R-1,M.A. Johar Town,
Lahore
Direct: (042) 35315621
PABX: (042) 35315624-5
Fax: (042) 35315627
Peshawar
Peshawar Cantt.
1-2, Cantt. Plaza, Fakhr-e-Alam Road,
Peshawar.
PABX: (091) 9213740-41
Direct: (091) 9213743
Fax: (091) 9213742
G.T. Road, Peshwar
Ground Floor, Daily Aaj Building, G.T. Road,
Peshawar.
Direct: (091) 2261609
PABX: (091) 2261655 – 56
Fax: (091) 2261654
Dalazak Road, Peshwar
Khasra No.993/576, Opposite Tailu Mandi,
Murad Khan Plaza, Dalazak Road,
Peshawar.
Direct: (091) 2244320
PABX: (091) 2244322 –23
Fax: (091) 2583729
Kohat
Multan
Gujranwala
G.T. Road
BXII-7S-III, Near Din Plaza, G.T. Road,
Gujranwala
Direct: (055) 9201344, 9201348
PABX: (055) 9201345 – 46
Fax: (055) 9201347
Faisalabad
Kohinoor City
Plot No. C-11, Square No. 64, Kohinoor City,
Jaranwala Road, Faisalabad
Direct: (041) 9220620
PABX: (041) 9220623 – 29
Fax: (041) 9220622
Sialkot
Paris Road
Sharif Plaza, Ground Floor, Paris Road,
Sialkot
Direct: (052) 9250161
PABX:(052) 9250163-65
Fax: (052) 9250164
G.T. Road, Sambrial
Plot No. BI-847,Sahowala, G.T Road
Sambrial, Dist. Sialkot.
Direct: (052) 6522820
PABX: (052) 6522822-23
Fax: (052) 6522825
Gujrat
Bhimber Road, Gujrat
Opposite UBL, Bhimer Road, Gujrat.
Direct: (053) 3609604
PABX: (053) 3609601-2
Fax: (053) 3609603
Plot No. KCB-III/10, KCB-III/ 12,KCB-III/12-A
& KCB-III/12-F, Hangu Road, Kohat
Direct: (0922) 510191
PABX: (0922) 510914-15
Fax: (0922) 510912
Abbottabad
Mansehra Road, Abbottabad
Lodhi Golden Tower, Supply Bazar,
Mansehra Road,
Abbottabad.
Direct: (0992) 336202
PABX: (0992) 336262-3
Fax: (0992) 336261
Quetta
M.A. Jinnah Road
2-14/2-3, Near Dr. Bano Road, Adjacent
to Ahmed Complex, M.A. Jinnah Road,
Quetta.
Direct: (081) 2820910, 2820927
PABX: (081) 2820922-23
Fax: (081) 2820943
page | 201
Askari Bank Limited
Statement of Financial Position in US$
2009
2008
US $ in ‘000 2009
Assets
Lendings to financial institutions Investments
Advances
Deferred tax assets
Other assets
230,122 99,289 54,772 795,878 1,602,943 116,884 –
119,137 202,654 49,999 56,635 451,055 1,628,580 104,508 –
113,333 2008
Rupees in ‘000
19,385,843 8,364,261 4,614,059 67,046,033 135,034,499 9,846,440 –
10,036,311 16,029,635
3,954,814
4,479,754
35,677,755
128,818,242
8,266,458
–
8,964,480
3,019,025 2,606,764 Liabilities
254,327,446 206,191,138
34,967 229,105 2,444,994 71,163 – 3,964 57,377 32,679 192,041 2,119,845 37,878 – 164 60,167 2,945,670 19,300,163 205,970,227 5,994,900 –
333,925 4,833,489 2,584,828
15,190,148
167,676,572
2,996,100
–
12,987
4,759,140
2,841,570 2,442,774 239,378,374 193,219,775
177,455 14,949,072 12,971,363
5,073,467 7,182,987 886,234 4,058,774
7,667,141
308,980
163,990 60,225 51,313 85,267 96,932 10,520 3,906 Bills payable
Borrowings
Sub-ordinated loans
Other liabilities
Net assets
Represented by
Share capital
Reserves
156,012 21,443 152,151 11,839 Surplus on revaluation of assets - net of tax
13,142,688 1,806,384 12,034,895
936,468
177,455 163,990 14,949,072 12,971,363
Note:
The above is for information only and conversion have been made @ 1US$ = Pak Rs. 84.2416 as at December 31, 2009.
(1US$ = Pak Rs. 79.0985 as at December 31, 2008).
page | 202
Profit and Loss Account in US$
2009
2008
US $ in ‘000 2009
269,009 161,786 232,537 134,651 107,223 97,886 Mark-up / return / interest earned
2008
Rupees in ‘000
22,661,754 13,629,096 18,393,313
10,650,719
9,032,658 7,742,594
27,592 5,117 911 981 – 48,355 – 6
– 3,127 Provision against non-performing loans and advances
2,324,377 431,058 76,784 82,674 – 3,824,778
–
508
–
247,311
34,601 51,488 2,914,893 4,072,597
72,622 46,398 Net mark-up / interest income after provisions
6,117,765 3,669,997
Non mark-up/interest income
15,523 1,929 6,392 1,706 – (23)
4,798 15,899 2,195 11,043 465 – 283 4,338 Fee, commission and brokerage income
Dividend income
Unrealised (loss) / gain on revaluation of investments classified as held for trading - net Other income
1,307,699 162,537 538,445 143,717 –
(1,918)
404,221 1,257,584
173,621
873,512
36,743
–
22,384
343,156
30,325 34,223 Total non mark-up / interest income
2,554,701 2,707,000
102,947 8,672,466 6,376,997
80,621 Non mark-up/interest expenses
83,045 – 408 74,643 6
139 Administrative expenses
6,995,857 –
34,368 5,904,169
459
10,987
83,453 74,788 Total non-markup / interest expenses
7,030,225 5,915,615
19,494 –
5,833 – Extra ordinary / unusual items 1,642,241 –
461,382
–
19,494 5,833 PROFIT BEFORE TAXATION
1,642,241 461,382
6,673 1,422 (1,751)
220 (632)
1,363 Taxation – current
– prior years’
– deferred
562,099 119,827 (147,478)
17,363
(50,000)
107,794
6,344 534,448 75,157
13,150 3,668 4,882 27,116 PROFIT AFTER TAXATION
1,107,793 308,980 386,225
2,144,810
16,818 31,998 Profit available for appropriation
1,416,773 2,531,035
0.03 0.01 2.18 0.76
951 Basic / diluted earnings per share - US $ / Rupees
Note:
The above is for information only and coversion have been made @ 1US$ = Pak Rs. 84.2416 as at December 31, 2009.
(1US$ = Pak Rs. 79.0985 as at December 31, 2008).
page | 203
Askari Bank Limited
ACCEPTANCES
Promise to pay created when the
drawee of a time draft stamps or
writes the words “accepted” above his
signature and a designated payment
date.
ACCRUAL BASIS
Recognizing the effects of
transactions and other events when
they occur without waiting for receipt
or payment of cash or its equivalent.
BILLS FOR COLLECTION
A bill of exchange drawn by the
exporter usually at a term, on an
importer overseas and brought by the
exporter to this bank with a request
to collect the proceeds.
BONUS ISSUE (SCRIP ISSUE)
The issue of new shares to existing
shareholders in proportion to their
shareholdings. It is a process for
converting a company’s reserves (in
whole or part) into issued capital and
hence does not involve an infusion of
cash.
CAPITAL ADEQUACY RATIO
The relationship between capital and
risk weighted assets as defined in the
framework developed by the State
Bank of Pakistan.
CASH EQUIVALENTS
Short-term highly liquid investments
that are readily convertible to known
amounts of cash and which are
subject to an insignificant risk of
changes in value.
COMMITMENT TO EXTEND CREDIT
Credit facilities approved but not yet
utilized by the client as at the Balance
sheet date.
page | 204
COMMITMENT TO EXTEND CREDIT
Commitments to extend credit
are those commitments that are
irrevocable because they cannot be
withdrawn at the discretion of the
bank without the risk of incurring
significant penalty or expense.
(b) it requires no initial net
investment or an initial net
investment that is smaller than
would be required for other
types of contracts that would
be expected to have a similar
response to changes in market
factors; and
CONTINGENCIES
(c) it is settled at a future date.
A condition or situation existing
at Balance Sheet date where the
outcome will be confirmed only by
occurrence of one or more future
events.
COST / INCOME RATIO
Operating expenses as a percentage
of total income.
EARNINGS PER SHARE
Profit after taxation divided by the
weighted average number of ordinary
share in issue.
EFFECTIVE TAX RATE
Provision for taxation excluding
deferred tax divided by the profit
before taxation.
CORPORATE GOVERNANCE
The process by which corporate
entities are governed. It is concerned
with the way in which power is
exercised over the management and
direction of entity, the supervision of
executive actions and accountability
to owners and others.
CAGR
An abbreviation for Compound Annual
Growth Rate.
DEFERRED TAXATION
Sum set aside for tax in the Financial
Statements that will become payable
in a financial year other than the
current financial year.
DERIVATIVES
Derivative is a financial instrument
or other contract which has the
following characteristics:
(a) its value changes in response to
the change in a specified interest
rate, financial instrument
price, commodity price, foreign
exchange rate, index of prices
or rates, credit rating or credit
index, or other variable, provided
in the case of a non-financial
variable that the variable is
not specific to a party to the
contract (sometimes called the
‘underlying’);
EQUITY METHOD
A method of accounting whereby the
investment is initially recorded at cost
and adjusted thereafter for the post
acquisition change in the investor’s
share of net assets of the investee.
The Income Statement reflects the
investor’s share of the results of
operations of the investee.
FINANCE LEASE
A contract whereby a lessor conveys
to the lessee the right to use an asset
for rent over an agreed period of time
which is sufficient to amortise the
capital outlay of the lessor. The lessor
retains ownership of the asset but
transfers substantially all the risks
and rewards of ownership to the
lessee.
FORWARD EXCHANGE CONTRACT
Agreement between two parties to
exchange one currency for another at
a future date at a rate agreed upon
today.
GROSS DIVIDENDS
The portion of profits distributed to
the shareholders including the tax
withheld.
GUARANTEES
An agreement involving a promise by
a person (the guarantor) to fulfill the
obligations of another person owning
debt if that person fails to perform.
HISTORICAL COST CONVENTION
Recording transactions at the actual
value received or paid.
INTEREST IN SUSPENSE
Interest suspended on nonperforming loans and advances.
INTEREST SPREAD
Represents the difference between
the average interest rate earned and
the average interest rate paid on
funds.
LIQUID ASSETS
Assets that are held in cash or in a
form that can be converted to cash
readily, such as deposits with other
banks, bills of exchange, treasury bills.
LOAN LOSSES AND PROVISIONS
Amount set aside against possible
losses on loans, advances and
other credit facilities as a result
of their becoming party or wholly
uncollectible.
MARKET CAPITALISATION
Number of ordinary shares in issue
multiplied by the market value of
share as at the year end.
MATERIALITY
The relative significance of a
transaction or an event the omission
or misstatement of which could
influence the economic decisions of
users of financial statements.
NET ASSETS VALUE PER SHARE
Shareholders’ funds divided by the
number of ordinary shares in issue.
NET DIVIDENDS
NET INTEREST INCOME
The difference between what a
bank earns on assets such as loans
and securities and what it pays on
liabilities such as deposits, refinance
funds and inter-bank borrowings.
NON PERFORMING LOANS
A loan placed on cash basis (i.e
Interest Income is only recognized
when cash is received) because in
the opinion of management, there
is reasonable doubt regarding the
collectability of principal or interest.
Loans are automatically placed
on cash basis when a payment is
3 months past due. All loans are
classified as non-performing when a
payment is 3 months in arrears.
OFF BALANCE SHEET
TRANSACTIONS
Transactions that are not recognized
as assets or liabilities in the
balance sheet but which give rise to
contingencies and commitments.
PRICE EARNINGS RATIO (P/E
RATIO)
Market price of a share divided by
earnings per share.
PRUDENCE
Inclusion of a degree of caution in
the exercise of judgment needed in
making the estimates required under
conditions of uncertainty, such that
assets or income are not overstated
and liabilities or expenses are not
understated.
RELATED PARTIES
Parties where one party has the
ability to control the other party or
exercise significant influence over the
other party in making financial and
operating decisions.
RISK WEIGHTED ASSETS
On Balance Sheet assets and the
credit equivalent of off balance sheet
assets multiplied by the relevant risk
weighting factors.
REPURCHASE AGREEMENT
Contract to sell and subsequently
repurchase securities at a specified
date and price.
REVERSE REPURCHASE
AGREEMENT
Transaction involving the purchase
of securities by a bank or dealer and
resale back to the seller at a future
date and specified price.
RETURN ON AVERAGE EQUITY
Net profit for the year, less preference
share dividends if any, expressed
as a percentage of average ordinary
shareholders’ equity.
REVENUE RESERVE
Reserves set aside for future
distribution and investment.
SHAREHOLDERS’ FUNDS
Total of Issued and fully paid share
capital and capital and revenue
reserves.
STATUTORY RESERVE FUNDS
A capital reserve created as per the
provisions of the Banking Companies
Ordinance, 1962.
SUBSIDIARY COMPANY
A company is a subsidiary of another
company if the parent company holds
more than 50% of the nominal value of
its equity capital or holds some share
in it and controls the composition of
its Board of Directors.
RETURN ON AVERAGE ASSETS
Profit after tax divided by the average
assets.
Dividend net of withholding tax.
page | 205
Askari Bank Limited
Notes
AGM
t 10:00 am
a
10
0
2
,
0
3
On March
Complex
Blue Lagoon
Gate of
d
r
a
w
t
u
O
e
Opposit
Rawalpindi.
l,
e
t
o
H
l
a
t
n
e
Pearl Contin
page | 206
Form of Proxy
Askari Bank Limited
I / We
of
being member(s) of
Askari Bank Limited (“the Bank”), holding
ordinary shares, do hereby
appoint
of
or failing
him / her
of
, who is also
member of the Bank, as my/our proxy to vote for me/ us, and on my/our behalf at the Extra-ordinary General Meeting of the
Bank to be held on Tuesday, March 30, 2010 at 10:00 a.m at Blue Lagoon Complex opposite outward gate of Pearl Continental Hotel
Rawalpindi and at any adjournment thereof.
As witness my / our hand this
day of
2010.
Witnesses:
Name:
C.N.I.C. No./Passport No.:
Address:
(Member’s signature on
Rs. 5/- Revenue Stamp
NOTES:
A. General:
1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote for him/her. No person
shall act as a proxy, who is not a member of the Bank except that Government of Pakistan / State Bank of Pakistan / corporate
entity may appoint a person who is not a member.
2. The instrument appointing a proxy should be signed by the member or his/her attorney duly authorized in writing. If the member
is a corporate entity (other than Government of Pakistan and State Bank of Pakistan), its common seal should be affixed on the
instrument.
3. The instrument appointing a proxy, together with Power of Attorney, if any, under which it is signed or a notarially certified copy
thereof, should be deposited, with the Company Secretary, Askari Bank Limited, 1st Floor, AWT Plaza, The Mall, P.O. Box No. 1084,
Rawalpindi not less than 48 hours before the time of holding the meeting.
4. If a member appoints more than one proxy, and more than one instrument of proxy are deposited by a member, all such
instruments of proxy shall be rendered invalid.
page | 207
Askari Bank Limited
The Company Secretary:
ASKARI BANK LIMITED
AWT Plaza, The Mall, P.O. Box No. 1084,
Rawalpindi - Pakistan.
page | 208
All our efforts are
driven by the will to
be instrumental in
your success
CMYK • Special Yellow • Askari Cover • Askari Bank Annual Report 2009 • 5 Colors • March 01, 2010
Moving
a click
ahead
Moving a
click ahead
Contents
01
02 04 06
08
10
12
16
18
19
20
21
22
24
28
30
31
32
44
46
47
48
50
52
18 Years of banking
What we stand for
Vision & Mission
Management
Organogram
Entity Ratings
Financial Review
Financial Calendar
Directors’ Report
times to come.
Askari Bank Limited
67
69
70
72
73
74
75
76
Cash Flow Statement
131
132
133
134
135
136
191
192
194
202
203
204
207
Branch Network
Form of Proxy

Annual Report

Transcription

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